February 28th, 2009

Kindlenomics: Keep publishers and authors happy (cave once in a while)

Posted by Larry Dignan @ 12:26 pm

Categories: Amazon, E-commerce, General, Personal Technology

Tags: Amazon.com Inc., Author, Guild, Robots, Emerging Technologies, Larry Dignan

Amazon has backtracked a bit on the Kindle 2’s text-to-speech feature, which riled up the Author’s Guild. 

Amazon’s most recent move (statement, Techmeme) is designed to appease the Author’s Guild. The Author’s Guild argued that the text-to-speech feature, which allowed a robotic voice read a book to you, was a substitute for audio books. Therefore, Amazon should be paying audio rights to authors. 

The Author’s Guild argument is ridiculous on many fronts. And now that I have been playing with my Kindle 2 review device the authors’ argument is even more silly. You–at least I–can’t listen to the text-to-audio feature for any extended period, but having a robot curse while reading Artie Lange’s Too Fat to Fish is mildly amusing. 

As many have noted the Author’s Guild seems to be arguing that reading to your child is nefarious unless you pay a fee to content creators. On the other hand, it’s business. Authors want to be compensated. Amazon needs authors to keep its ecommerce sales–and the Kindle store–rolling. Meanwhile, Amazon owns Audible, the leading audio bookdistributor. Simply put, Amazon and authors have a lot of skin in this debate.

Enter the compromise. 

In a statement, Amazon says:

Kindle 2’s experimental text-to-speech feature is legal: no copy is made, no derivative work is created, and no performance is being given. Furthermore, we ourselves are a major participant in the professionally narrated audiobooks business through our subsidiaries Audible and Brilliance. We believe text-to-speech will introduce new customers to the convenience of listening to books and thereby grow the professionally narrated audiobooks business.

Nevertheless, we strongly believe many rightsholders will be more comfortable with the text-to-speech feature if they are in the driver’s seat.

Therefore, we are modifying our systems so that rightsholders can decide on a title by title basis whether they want text-to-speech enabled or disabled for any particular title. We have already begun to work on the technical changes required to give authors and publishers that choice. 

This move makes a good bit of sense in the context of Kindlenomics. It’s a compromise that keeps authors happy, makes Amazon’s point clear and lets the market decide where the feature goes. More importantly, Amazon can stay focused on growing its Kindle market. 

All Amazon wants to do is sell more books. In fact, that’s all the Author’s Guild wants to do too. Given that reality Amazon isn’t going to sweat a little retreat once in a while. It’s about the store not the features on the Kindle. In other words, it’s all about the money.

February 28th, 2009

Is the call center finally coming onshore?

Posted by Phil Fersht @ 9:20 am

Categories: Credit crisis, Economy, Offshore outsourcing, Outsourcing

Tags: Agent, Call-center, Call Centers, Customer Relationship Management (CRM), Real Estate, It Operations, Enterprise Software, Software, Business Operations, Phil Fersht

We had a great discussion a few weeks’ ago regarding the USA’s potential to take on more sourcing work, with increasing unemployment and downward wage pressures.  I’ve made this point a few times now, but BPO is clearly the bigger onshore opportunity than mainstream application services for the US to muscle in on sourcing work.  And where better to start than the call center?

Bottom-line, President Obama should take a leaf out of Margaret Thatcher’s book and examine simple effective ways to provide productive and sustainable employment in depressed areas where industry is in a terminable decline.  I never voted for old Maggie, but she did do one very smart thing during her tenure as British PM - she closed down unprofitable coalmines during the 80’s recession, and encouraged businesses to set up call centers in depressed British cities.  Now there are over 650,000 call center employees across the UK.  Wages in the UK are competitive for qualified staff - and they don’t command ridiculous healthcare premiums.  (I just saw one main healthcare insure just increased its premium by 20% this year).  While there are some good investment ideas inthe stimulus package, I would have liked to have seen some focus on business service support areas - as we discussed here.

Protectionist sentiment is swelling. The Buy America provisions in the stimulus bill are symbolic of the increasing resentment towards jobs and work going overseas. I have already seen this provision included in some sourcing RFPs from healthcare organizations and other companies benefiting from bailout money, or with significant public sector influence.

With over two-thirds of Americans filing first-time unemployment claims for the week ending February 21 to bring the total to over 5.1 million, this tide will surely rise. Over the past decade there had been considerable leakage of domestic customer service agent seats to offshore locations. Customer service is returning back to the country, literally. Inspired by the Canadian model and technological advances, customer care is increasingly being delivered from rural America.

The customer service rep is the organization’s ambassador to the caller. The human voice provides the company’s human face. Much of the time when the customer calls it is because something has gone wrong. If the caller cannot understand the agent due to accent issues and/or communicative styles, the problems are compounded. The caller can become agitated and the company may wind up losing a customer. In the present economic environment, just hearing a foreign accent could trip the trigger. Losing dollars chasing dimes is not wise.

Earlier in this decade, there was a mad dash for the low-wages on offer in India - and more recently the Philippines and low-cost Latin American countries such as Peru and Nicaragua. Everything was thrown over the wall once telecommunications technology and the associated costs became less of an issue. A Mercedes Benz owner was furious when connected with an offshore agent, “How can somebody help me with problems related to my car when they have probably never even driven one?”

Like Britain in thn 1980’s, Canada has also explored ways to grow its economy, concludingthat the stability of the nation and its people were major assets. It was determined that the call center industry to serve the American market presented an excellent opportunity. Beginning in the late eighties, strategic initiatives were put in place involving tremendously unified efforts by all levels of government and higher education. These efforts were initially intended to address economic woes of unemployment in traditional industries and leverage the value of the Canadian dollar.

The programs proved to be successful, particularly in more rural areas. The Canadian turnover rate was consistently a third of US. As there was less competition in rural areas from other industries for workers, there was far greater retention and a seasoned experienced workforce developed.

American providers have noted the formula along with being able to take advantage of the lower cost of living in many rural areas. Additionally, wages are lower with a reduced turnover rate adding to the value proposition. Human resources consultant FurstPerson reports in its 2008 Call Center Recruiting and Compensation Survey that the average cost of attrition per agent is $5,466.32. Consequently, call center providers are increasingly leveraging opportunities in areas with smaller cities, particularly in the Midwest.

One such provider is West Direct headquartered in Omaha, Nebraska (the oft-dubber “call-center capital” of the US). The business model is based on having 39 contact centers around the country, mostly in cities with populations ranging from 50,000 to 150,000. West Direct also employs home-based agents.

By offering telecommute positions; a much wider net can be cast to attract agents in outlying areas. The employee saves time on commuting and the cost of fuel. The employer is able reduce the costs of a seat in a brick and mortar center while frequently attracting high quality employees at a lower wage. It is common for the churn rate to be in single digits for home-based agents.

Technology, high-speed connections, and Web based applications has enabled companies to tap into rural America with its strong work ethic. Customer care can be domestically delivered at an attractive price point with callers being greeted by a fellow American.  I’ll wager $100 we have new call center development in Michigan before 2009 is over.

February 27th, 2009

So what is the cloud, exactly? Experts want to know

Posted by Andrew Nusca @ 2:42 pm

Categories: Cloud computing, SaaS, Wharton Future Unleashed

Tags: Service, Cloud, JA, BL, PK, KH, AA, VC, MC, Hosting Industry

So what is the cloud, exactly?

Industry experts would like to know, according to a panel discussion today at Wharton Business School’s 13th annual business technology conference, “Future Unleashed,” in Philadelphia.

The panel, which consisted of six industry leaders whose respective companies are immersed in various parts of the cloud, agreed that though cloud computing is hard to define, it’s the reality of how it affects us on a daily basis — rather than its definition — that is important.

The panel of experts was as follows:

• JA: Jonathan Appavoo, research scientist, IBM T.J. Watson
• AA: Dr. Anthony Arrott, special assistant to the CTO, Trend Micro
• MC: Mark Canepa, president and CEO, Extreme Networks
• VC: Vance Checkletts, COO, Decho, an EMC company (of Mozy backup software fame)
• BL: Barry Lynn, chairman and CEO, 3tera Inc. (of App Logic fame)
• PK: Prasanna Krishnan, associate, Draper Fisher Jurvetson
• KH: Kartik Hosanagar, professor of information and operations management, Wharton (moderator)

Everything from the very definition of cloud computing to the challenges it poses to the business model upheaval it is causing was discussed. Here’s what happened.

KH: So what is cloud computing? How would you define it?

JA: A way of delivering value and monetization efficiency.

KH: Larry Ellison once said in an interview, “What the hell is cloud computing?” I would say that cloud computing is “the notion of data and applications and hardware sources being accessed remotely.”

AA: In a recent Economist survey, 20 years ago your typical knowledge worker got 80 percent of the info needed to do their job came from inside the company. Today, it’s completely flipped. Cloud computing is the technical response to this reality.

Read the rest of this entry »

February 27th, 2009

Cablevision's New Online News Model May Be Optimum. Or Not.

Posted by Tom Steinert-Threlkeld @ 1:21 pm

Categories: Advertising, Apple, Business 2.0, Digital Media, E-commerce, General, Innovation, Media

Tags: Newsday, Cablevision Systems Corp., News, Times Select, Tom Steinert-Threlkeld

This is a day you hope will be a turning point in the search for a sustainable business model online for the kind of journalism that requires sustained research, writing and editing. Original fact-finding and analysis based on that fact-finding.

The Rocky Mountain News in Denver today published its final edition, after nearly 150 years. That’s the bad news.

Newsday, now owned by Cablevision, meanwhile said it would fly counter to conventional wisdom with its perch online and in the not-distant future start charging for its news, online. No more free stuff.

“We plan to end the distribution of free Web content and make our news gathering capabilities a service for our customers,” Cablevision’s chief operating officer, Tom Rutledge.

Is this just going to be the latest unsuccessful effort to get readers (or viewers) to pay for news? If The New York Times — the best of the daily newspapers — can’t its loyal, thoughtful and high-demographic audience to pay for it online, who can? Newsday is a good newspaper. But it’s no New York Times.

The Times stuck its toe in the water, trying to getting people to subscribe (for a fee) to read its columnists and editorialists online. The Times Select service pulled in $10 million a year in subscription revenue. But got closed down, you were left to think, because foregone ad revenue from higher traffic would have been greater.

But Rutledge is not sticking a toe in the water. It’s ending the distribution of Web content for free. Period. That’s how I read and hear what Rutledge is saying.

That’s a wholly different model. And one that comes down to what a company thinks its own product is worth. Newspapers didn’t have to starve themselves online. In fact, one of the very first online “newspapers” — StarText from the Fort Worth Star-Telegram — charged $5 a month for its menu-driven news in the 300 baud days of computing. In 1982. Before the Mac was born and when Commodore was still a name to be reckoned with.

That service only managed to pick up 3,000 paying customers. But guess what? Its costs were low and it made a profit. More importantly, it established the principle that if you wanted news to come over a wire, it was going to cost you. Just like in print. Because the news you were getting was every bit as valuable, even if it came on screen.

Today was a typically frustrating day for me in getting my print edition of The New York Times. I live in Fairfield County, CT. Home turf. Its guarantee: delivery by 6:30 a.m., every weekday. But that has not been the case for the last four days. Today, it wasn’t there when I left at 7 a.m. No problem. I was headed to Starbucks in Wilton. Its racks were empty — at 8 a.m. I had to go to a third stop, a Stop & Shop to get one. All because I didn’t bring my iPod Touch with me.

The Times is better online than it is in print. Believe me, I prefer reading it on a laptop and even on the Touch.

But the point is this: The Times is driving me to drop the print product. Why should I pay $40 a month for something that doesn’t arrive, when I get everything on its pages and more, for free, on screen?

It’s not like I don’t value it. I just don’t have to pay for it, on screen.

If you don’t value your product, why should the customer? If you make it available for free, why should anyone pay for it? You set the expectation. And enforce it. Not half way. The whole way.

Now, it’ll be interesting to see if Newsday can stick by its guns, online. Says here, The Times would have a much better shot of getting $20 a month online, than its friendly Long Island rival will.

So stay tuned. It’ll be really interesting to see, in the meantime, what Rutledge comes up with in the way of a creative Cablevision news service online, with or without the Newsday brand.

On cable, it’s already staked out pieces of what used to be core to the news business in print, with its Optimum Autos and Optimum Homes listing services online. It also has its News 12 local TV news networks (”free” — if you subscribe to cable TV).

Now, we’ll have to see what Rutledge makes of news, online. And whether its idea that you can charge for it will be Optimum. Or not.

February 27th, 2009

A sad day for newspapers; Is it too late for them to change?

Posted by Sam Diaz @ 1:01 pm

Categories: Economy, General, Media

Tags: Newspaper, Strategy, Games, Leadership, Blogging, Management, Personal Technology, Internet, Sam Diaz

Today marks a sad day for newspapers. First, today’s print edition of the Rocky Mountain News was its last. After 150 years in business, the newspaper is closing, a victim of the Internet and the economy. Then, the American Society of Newspaper Editors, a pretty influential group of the nation’s top newsroom execs, announced the cancellation of its April convention. Across the industry, the cancellation is being viewed as a symbolic event that says something bigger about the fate of newspapers. More on that below.

In my world, I saw an even bigger blow to the newspaper industry this morning: two people who could have been and should have been life-long readers - my mom and dad - canceled their subscription to the hometown paper today.

I never thought I’d see the day when my dad would be sitting in his recliner on a Sunday morning, cup of coffee on the end table but no newspaper in his hand. But, he’d finally had it. The content, he said, had suffered so much because of the newsroom layoffs and cutbacks that he just couldn’t bring himself to read it anymore. Oh yeah, and the price of the subscription went up. There was no way they were willing to pay more for less.

I don’t pretend to have the answers on how the newspaper business can salvage what’s left of the business. Sure, I can point fingers back in time and talk about how they were late to the online game and unwilling to break hold of the old model and try new things - before the panic set in, that is. But that was then. What’s done is done.

Is it too late for newspapers? Maybe. But I don’t think it’s too late for “news content providers.” (Coincidentally, ASNE’s members were going to vote at the April convention about dropping “paper” from the group’s name.) I also don’t think that journalism is anywhere near dead. On the contrary, I think there’s greater demand for quality journalism, no matter whether I read it on a dead tree, a PC or my Blackberry. The need for a free press, one to watch over a government that has troops overseas and is injecting billions of dollars into economic recovery, has never been greater.

A blog post by the Knight Digital Media Center this morning looks deeper at the implications of ASNE’s canceled convention and asks the question of whether newspaper executives have given up on learning. Michelle McLellan, who wrote the blog post, says:

Lack of innovation is a real crisis in the news industry and innovation requires that leaders turn from the urgent to the important. The traditional culture of newsrooms is one of command and control and the executive who never gets out of the newsroom epitomizes that. The traditional culture is also one that resists change, preferring instead to focus on perfecting narrow objectives.  It’s a culture that does not make time to learn to change.

She’s right in that newspapers - no matter how late in the game - need to learn how to change. In this economic climate, no industry - from automakers to banks to newspapers - can afford to hold on to the old way of doing things. The world is changing. If you don’t keep up and change with it, it will knock you down and move right past you.

In the newspaper industry, it happened this morning in Denver.

February 27th, 2009

AMD CIO: Key to success is fusion of business acumen and tech innovation

Posted by Andrew Nusca @ 11:44 am

Categories: Wharton Future Unleashed

Tags: Innovation, Information Technology, IT Professional, Advanced Micro Devices Inc., Technology, Strategy, Management, Andrew Nusca

The intersection and fusion of business insight and technological innovation is the key to creating successful new business models, said AMD Chief Information Officer Ahmed Mahmoud today in the keynote of Wharton Business School’s 13th annual business technology conference, “Future Unleashed,” in Philadelphia.

In a “fireside chat” with IBM Global Business Services global lead partner Saul Berman, Mahmoud said IT professionals must master each facet of their company to fully understand the business.

“Business acumen is absolutely the most critical skill that people need to develop – through hard times or whatever,” Mahmoud said. “Whether you’re opening up a restaurant or running an IT department. It is very necessary for the IT professional to know HR, finance, engineering.”

THE IT ADVANTAGE

Mahmoud said IT is essential to manage projects in a corporation today, no matter what department that project originates in.

“You’re looking for someone with business acumen and project management skills,” Mahmoud said. “The amount of money you’re spending is extremely valuable, even at a low-cost center. IT is everywhere in our lives…when was the last time you actually saw a memo on paper that comes to your [physical] inbox?”

“Sometimes I feel like IT is the Army. There is a job for you – it doesn’t matter what you do…every facet of the business, we need your expertise to finish the job.”

The ubiquity of IT makes it easy for “efficiencies” such as virtualization to get out of hand and become less efficient, Mahmoud said.

“People are beginning to say, when we moved away from the mainframes years ago, that was the VMware of the past,” he said. “We felt it was sort of constraining, and each of us bought our own servers, and they bred like rabbits. We had data centers overflowing and the utilization per server was under 10 percent! Now we’re driving to…10 percent? Can I put 10 to 15 applications on it and solve multiple problems? Manageability? Building space? Power use? Virtualization is this whole concept of server consolidation. Teams still don’t have to talk to each other, because the virtualization does it for them.”

Add the cloud to the mix, and problems can multiply, Mahmoud said.

“[Now] you’re not just virtualizing between departments and applications, you’re virtualizing between enterprises,” he said. “Everyone knows how to e-mail in the cloud. But what other apps, what is the new framework to take advantage of a richer set of apps in the cloud? Sometimes, the apps don’t lend themselves to the cloud.”

Mahmoud said he uses the cloud strategically at AMD.

“[At AMD] my average utilization on the 30,000 servers I have is 96 percent. So I’ve created my own internal cloud. I think of it as leasing – I might use the cloud for peaks that I might have.”

But problems can creep up from solutions originally conceived as efficiencies, Mahmoud said.

“Offshoring, outsourcing, it’s all part of the toolbox that an IT shop has,” he said. “It is a standard method of operation. The trick is, how do we make it more effective?” Offshore, you’re playing a labor arbitrage game…after awhile, you run out of places to go.”

“Now there’s a trend of people considering a near-shore experience – Mexico, Argentina, Brazil, rather than India or China. But there’s a time zone issue. It’s not lack of talent – it’s the logistics of waking up at 6 a.m. for a conference call and staying up until 11 p.m. for another call. Timezones turned out to be one of the most [important] indicators to show effectiveness.”

The economic crisis is an opportunity in disguise, Mahmoud said.

“When the economy is tough, in certain situations it’s the best thing for IT. What’s critical is how you can sustain efficiency. During these economic times, IT is being looked at as a way to optimize the whole business.”

Which means other departments look to IT for project management, he said.

“One of the things IT does is projects; managing projects. Some companies are asking IT dept to manage project” irrelevant of tech issues, he said.

“[At AMD] I help drive the corporate strategy. I’m sort of the cattle herder of corporate strategy for AMD. Do we get invited to the table? I’m probably the one scheduling the meetings.

“They still say” that IT is always late on projects, Mahmoud said, “but now we’re invited to the table.”

THE STIMULUS EFFECT

There are opportunities in the economic stimulus for IT departments, such as Internet access in rural America, the ’smart’ grid and renewable energy incentives to make data centers more efficient, Mahmoud said.

“There’s a lot of opportunity,” he said. “We just need to see which of these [initiatives] take root and move forward. When they’re talking about infrastructure, they’re talking about electricity, Internet, data center efficiencies, medical records in a common format, et cetera.”

But IT professionals have to shape up their own ship first, he said.

“It is critical to figure out how to optimize your business function – your department and the whole company,” he said. “That is the level of thinking that we are looking for people to come to us with. It doesn’t matter what department they’re in. They need to start thinking in a very horizontal fashion versus a vertical fashion. ‘This might not be good for my area but it’s good for the whole company.’ ”

“You might improve one department, but you make 10,000 people less productive. You see it all the time in a siloed fashion – I call it ‘micro-optimizing.’ The future is to think about macro-optimization.”

COST REDUCTION

One of the challenges is bringing down the price of the bill, Mahmoud said.

“Artificial cost reduction – I call it ‘cost transformation,’ ” he said. “The fully landed price hasn’t changed. True transformation is to ask how you can create a more efficient supply chain so you can reduce the total cost. Not not paying for freight, but reducing the need for freight. People have not focused on cost destruction, instead of left pocket, right pocket.”

LESSONS LEARNED

Mahmoud said he used his physics background — both his bachelors and masters degrees are in theoretical physics — to understand his value as an IT professional.

“[Physics] work was kind of hard,” he said. “It was hard work, and they don’t pay you very much, and it takes two or three years to find out if you’ve ever solved anything.” After taking a programming job at an IT shop, “they doubled my pay and the work was so much easier. It’s been that way ever since. Every job is easier and they pay you more,” he said with a laugh.

“I’ve always looked at myself as a business professional rather than an IT professional,” he said. “[When he was in charge of Dell's IT arm], I sort of ran e-commerce…I became a supply chain expert.”

IT pros must focus on understanding the business problem versus the tech problem, Mahmoud said.

“Solve and optimize the business problem,” he said. “Sometimes it requires technology, and sometimes it doesn’t.

“Every single company does something completely different. Selling houses, websites, collecting garbage – technology is a critical part of how they function. That’s the world we live in today — small shops, large shops – it’s a common set of problems and the technology we’re bringing to the forefront will help solve those problems.”

“If you have to talk in business terms, it comes down to the bottom line. What are we doing, and how will this technology help the bottom line – or drive the top line.”

HOW AMD FITS IN

“In x86 architecture, there’s Intel and there’s AMD,” Mahmoud said. “In GPUs, there’s NVIDIA and AMD. AMD is the only one that does both. It’s pretty much at the pinnacle of technology. The company has been around for 40 years — things like the first dual-core processors were AMD. 64-bit in the x86 market was AMD. You just don’t hear about it because we’re a much smaller player.”

Mahmoud said the company sees its future in the convergence of the CPU and GPU spaces.

“How do we create this fusion of the GPU-CPU?” Mahmoud asked. “Nvidia says the CPU doesn’t matter. Intel says the GPU doesn’t matter. It’s the melding of these two technologies that will give us efficiencies in the future. You need to have a well balanced answer to that. The future will be based on end-user needs.”

Internally, the area for AMD that’s “the most ripe” for improvement is project engineering, Mahmoud said.

“You have 10,000 engineers that think of themselves as IT professionals in their own right,” he said. “There’s a lot of ideas there, but they’re extremely fragmented. We don’t have a great mechanism to make it enterprise ready. Every engineer optimizes his life a little bit, but you don’t have something that’s ready” for prime time.

“All the engineers love standards. They just want you to use their standards.”

It’s a matter of addressing the inefficiency and not just the tech, Mahmoud said.

“In the past, when people thought of solutions, they thought of an IT implementation,” he said. “But now, I’m thinking [about] operational excellence. I need to make sure the technology is in place and the whole problem is solved…before, the job was ‘your mess, for less.’ That’s not really an optimization; it’s still a mess. You just put it in a computer and did it a lot faster.”

IT professionals must keep cost destruction in mind within the framework of the entire company, he said. It’s not just having a seat at the table, but setting it with strategic implementation, he said.

“Technologists are just as stubborn as non-technologists, and vice-versa,” he said. “One of the biggest [successes] is Walmart. They have truly brought technology to the forefront of how they run their business model. It has nothing to do with whether they’re technologists or not. They brought the RFID thing to the forefront. One of the key measures to their success is due to their technology implementation.”

Success has more to do with organizing people, Mahmoud said. Getting technology to work is the easy part — even if that means taking advantage of the cloud.

“For us to take full advantage of the virtualization and cloud computing, the APIs and technology needs to be there…there’s a lot of work to be done. Google has done a tremendous job….I don’t want anyone to think that you can run every app in the cloud and it’s easy. That’s just not reality. Some of it is reality, but more work needs to be done.”

February 27th, 2009

Microsoft: Vision to 'fundamentally re-imagine productivity'

Posted by Andrew Nusca @ 8:59 am

Categories: Wharton Future Unleashed

Tags: Software, Vision, Microsoft Corp., Technology, Consumer Quality, Tools & Techniques, Strategy, Management, Andrew Nusca

Imagine drawing on floor-to-ceiling office windows with your finger, using them like a whiteboard, aided by contextual information right at your fingertips, translated as necessary. You haven’t lost your marbles — you’re participating in a global corporate meeting, and your colleagues are doing the same thing on four other continents. Your son calls your office — but you don’t have a phone. Instead, the call routes right to the office windows you are drawing on, which happen to be in a public meeting space in a Brussels airport. As you talk, you reach for your coffee mug, which shows — digitally and in real-time on the porcelain surface — that your beverage is cooling down from the 114 degrees it once was.

This isn’t the film Minority Report. This is the future. And it’s coming 10 years from now, said Microsoft Business Division president Stephen Elop today in the opening keynote of Wharton Business School’s 13th annual business technology conference, “Future Unleashed,” in Philadelphia.

Taking the stage to talk about the recession, the future of technology and Microsoft’s role in it all, Elop kicked off the conference with a bold display of technology in the Microsoft pipeline that he says will ultimately connect office to office, school to school, office to home to school and all of it to person.

“Our vision is to fundamentally reimagine productivity,” Elop said. “It would be very easy to hunker down and wait for the [economic] storms to pass…we have chosen a different path.”

TAKING CONTROL

To do so, Microsoft is spending $9 billion per year in R&D to take advantage of this “remarkable moment for businesses” focusing on “economic, demographic, and technological trends” in the industry.

Economic, as in focusing Microsoft’s vision and execution.

“Businesses that take advantage of secular trends and place fewer and bigger bets…those are the companies that thrive,” Elop said.

Demographic, as in taking advantage of the sobering statistics that, in 2012, 10,000 people in the United States will turn 65 every single day, and by 2050, more than 30% of the workforce will be over 65.

“Real time collaboration across global boundaries is what is going to define the millennial generation,” Elop said, noting that the U.S. is trending toward “blended generations” with different values and perspectives working together.

Technological, as in the explosion of the Internet from rudimentary to essential, the development of social networking from novelty to work tool, the emergence of voice and touch as real input methods, and the unification of different devices and platforms.

“The traditional desk phone is on its way out,” Elop said. “It may be gone before you leave the workforce.”

NEW TECHNOLOGY

To prove all this, Elop showed a five minute video of the technology brewing in Microsoft’s labs — a video showing off all of the technology listed in the first paragraph of this article.

“This is not science fiction,” Elop said. “Everything here is something that could be real. All of this is within reach.”

For example, Microsoft’s “Touchwall” prototype with “Plex” software that serves users as “a compelling virtual canvas,” which Elop said is available for download at OfficeLabs.com.

“When composing a document, you will become more of an orchestrator than an operator,” Elop said. “Data will offer itself up.”

Or the aforementioned office scene where workers “draw” on the interactive windows and other surfaces.

“Flexible, transparent and large-format technology,” Elop said. “People are working on bendable, unbreakable, transparent displays. Large-format displays. These are the types of things that are really beginning to happen.”

Or an airport scene in which a businessman uses location-based services on his transparent mobile device to find his way through an airport to a public meeting space so he can meet and collaborate with a colleague.

“Imagine living in a world where you spend significantly less time searching for your data,” Elop said. “Information will always be contextually relevant provided at the right time and in the right format.”

Like marrying Pico projection technology, which projects presentations on any surface, to global navigation technology, Elop said.

“Just imagine the meeting itself is an intelligent participant…you will walk into the meeting room and pick up last week’s brainstorming session right where you left off,” Elop said. “We envision in the near future software running in the cloud….seamless and secure.”

Or using the non-emissive, low-power display technology e-Ink for flexible digital newspapers and other devices.

“Newspapers, credit cards, pill bottles,” Elop said. “Power is only needed to change the image. This makes it an excellent enabler for electronic signage solutions.”

It’s ultimately about letting information flow easily to displays and devices, Elop said.

“Wherever you are, you have the software, data and rich collaborative tools you need,” he said.

THE FUTURE

“For those of us who choose to lead, we will have emerged having earned the right to [dictate] what the next chapter [brings],” Elop said.

Elop said that Microsoft is aware that it must change with the times to seize the next multi-billion dollar opportunity.

“Office is the majority of our revenue, but it’s not the majority of our growth,” he said. “[SharePoint] is a billion-dollar business that’s growing very rapidly, even during these tough economic times,” adding that he doesn’t have a traditional telephone at his desk at Microsoft HQ, and when someone calls him, they can reach him in the office, at his homes in Redmond and Toronto, or at a hotel room in Philadelphia in one effort.

“I look at our opportunity to impact or disrupt the market for the benefit of our customers,” Elop said.

Microsoft’s reputation as a follower and not an innovator isn’t accurate, Elop said.

“When you actually get into Microsoft, and discover the innovation and patents, it’s truly incredible,” he said. “Right now, there’s an internal conference at Microsoft to show off new technology. You have to look at the facts.”

Elop conceded that Microsoft has been a follower in the past in some segments of the industry. That’s why Microsoft employees are out talking about new technology, he said. “We’re saying it’s time to charge forward,” he said.

“We are making fewer, bigger bets, he said. “We’re investing hard and we’re going to continue investing hard. But we are being deliberate.”

Elop also noted the convergence between the business and consumer markets.

“Business computing and personal or consumer computing are increasingly becoming enmeshed with each other,” He said. “We believe that the consumerization of IT is here to stay. Consumer quality is being pushed into the enterprise and vice-versa…there is going to be quite a market shift that consumer trends are going to affect the enterprise.”

As for e-commerce, Elop said that a successful business model hasn’t yet been hatched.

“The shift to online spending continues to grow at great rates…[what's interesting] is that we are unable to predict what the economic model is going to be. ‘Oops — how are we going to make revenue?’ Some new models emerge: Google’s search and advertising. They’ve captured a dominant place in that market, one that’s difficult for companies like us to disrupt.”

Part of that means embracing software-as-a-service.

“We are fully embracing software plus services, even if we don’t know what it all means,” Elop said. the [desktop model] is not sustainable.”

“We don’t know if the water’s fine but we know we need to be in the pool.”

Finally, Elop said that the company’s “Quest Process” ensures that the vision of the company isn’t all top-down or bottom-up.

“It’s not some magical ‘Bill Gates hands-the-tablet-down and we all read it,” Elop said. “We go through a formal process. By having so many participating, the degree of buy-in is very strong…it’s important for me to stand in front of people and say we believe in it.”

Microsoft’s Business Division is responsible for Microsoft Office programs, servers and software-based services; Microsoft Dynamics, business applications for small and midsize businesses large organizations and divisions of global enterprises; and MIcrosoft’s Unified Communications, products that provide complete software-based communications tools to business.

February 27th, 2009

FTC: ID theft cases surge; 20-somethings biggest percentage of complaints

Posted by Larry Dignan @ 5:50 am

Categories: General, Government, Privacy, Security

Tags: Complaint, FTC, Consumer Sentinel Network, Twenty-somethings, Identity Theft, Security, Larry Dignan

The number of identification theft cases surged in 2008, according to the Federal Trade Commission’s annual data. 

In 2008, ID theft was by far the biggest complaint to the FTC, representing 26 percent of complaints. The next biggest complaint–third party and creditor debt collection scams–represented only 9 percent of complaints. The FTC’s annual Consumer Sentinel Network report, released Feb. 26, detailed that ID theft complaints totaled 313,982 in 2008, up from 259,266 in 2007. 

The Consumer Sentinel Network is a secure online database that harvests complaints from law enforcement authorities as well as other groups such as the Internet Crime Complaint Center and Better Business Bureau.

Here are the top 25 complaint categories, which often dovetail with the Internet. 

Meanwhile, email is clearly the preferred means of propagating fraud. Scam artists are most likely going to nail you via email. Phone scams have fallen from 11 percent to 7 percent from 2007 to 2008. My hunch: As more consumers use wireless as the primary phone it’s harder to track down victims. 

What’s also notable is the demographics. Twenty-somethings are most likely to get hit with ID theft. 

And the states most hit by ID theft:

February 27th, 2009

Novell chief: 'Our Linux performance did not meet our expectations'

Posted by Larry Dignan @ 2:30 am

Categories: General, Linux, Microsoft, Novell, Open Source

Tags: Novell Inc., Performance, Novell Linux, Linux, Operating Systems, Open Source, UNIX, Software, Larry Dignan

Novell’s fiscal first quarter results were a mixed bag and Linux invoices fell sharply as the company failed to sign big deals.

For the first quarter ending Jan. 31, Novell reported non-GAAP earnings of $24 million, or 7 cents a share, on revenue of $215 million. Those results were a penny better than Wall Street estimates. Net income for the first quarter was $11 million, or 3 cents a share.

On the surface, Novell’s quarter told a familiar tale. Open platform sales, which are dominated by Linux offerings, were $35 million, up 24 percent from a year ago. Other units had a mixed performance. Novell CEO Ron Hovsepian said that “invoicing was below our expectations in this weak economy.”

Hovsepian elaborated on Novell’s earnings conference call. Linux, viewed as Novell’s growth engine, sputtered in the quarter. Hovsepian said:

Our Q1 Linux performance did not meet our expectations as our pipeline coverage and conversion was overly reliant on direct sales and sales cycles lengthened. Going forward, we are focused on building our pipeline with and through partners and we will be aggressive on pricing to gain market share.

Matt Asay put it best: Novell will be putting its Linux on sale.

Novell CFO Dana Russell noted:

Linux invoicing was $23 million, down 42%. As we have stated before, our Linux business is dependent on large deals which may result in some fluctuations of our quarterly invoicing. This quarter we did not sign any large deals, many of which have been historically fulfilled by Microsoft certificates. Today we have invoiced $199 million or 83% of our original $240 million agreement.

Add it up and it appears that the Microsoft reselling agreement that put Novell’s Linux business on the map has played itself out. Meanwhile, an aggressive pricing strategy–for services attached to free software–can’t be good for profit margins going forward.

On the bright side, Novell said it is rolling out SUSE Linux Enterprise 11 later in the quarter. That rollout may improve Novell’s Linux invoicing fortunes.

Needless to say the Microsoft agreement gravy train was the big topic among analysts covering Novell. A few nuggets gleaned from Novell executives:

• Russell said that “customers certainly are price sensitive” and Novell expects that the prices for Microsoft-Novell Linux certificates are not going to hold.
• Demand generation for Novell’s Linux business is the company’s responsibility–not Microsoft’s. The big problem was that Novell was relying on big deals that failed to materialize.
• Invoicing for Novell’s Linux certificates appear to be moving back to historical norms, said Russell. If that’s the case then the first quarter hiccup will be an aberration.

February 27th, 2009

VOD chief: Comcast will survive in face of TV.com, Hulu

Posted by Andrew Nusca @ 2:08 am

Categories: Comcast

Tags: VoD, Comcast Corp., Cable Company, TV, Cable, Programming, Hulu, TVN Entertainment, ZD, DS

This week, Comcast announced its OnDemand Online service, promising anywhere online access to Comcast programming (broadcast, basic and premium channels, etc.) for its customers.

I sat down with Doug Sylvester, President and COO of TVN Entertainment, to talk about how Comcast’s entry into the broadband video on-demand market upends the business model and adjusts the playing field for the broadcast and cable TV industry.

TVN Entertainment is the world’s largest television on-demand company, reaching over 40 million households in the U.S., Canada, Mexico and Caribbean. On the distribution side, TVN’s customers include AT&T, Comcast, Cablevision, Cox, DirecTV, Verizon and other providers. On the programming side, the company serves the major networks, studios, basic and premium cable programmers, digitizing their content and managing distribution to partners.

Prior to joining TVN, Sylvester was President, COO and a board member of iFILM, an online media company. He was also the co-founder of E! Online, E!’s Internet business, and served as the company’s senior executive.

ZD: How does the Comcast announcement affect the current business model for content distribution?

DS: The networks and the cable operators have a very efficient business model today. That economic relationship — the fees exchanged — is very strong. Both groups have an incentive to preserve this business model, if possible. However, consumers clearly want access to programming across multiple platforms and devices, and they’re going to seek it out. So if you balance those two [motives], this announced [Comcast] partnership strikes a balance between them: the cable operators partnering with the networks to offer all that great programming, presumably as part of that bundled service to subscribers.

In my mind, the challenge for the networks and their sites — or for aggregation sites like Hulu or TV.com (a property of CBS Corporation, the parent company of ZDNet) — is that they have to take the time to build up an appropriate audience, which is difficult versus TV. As advertisements on those sites are watched, they have to be monetized, and if you were to trade off TV and broadband views one-to-one, that would be difficult for the networks to justify, financially. If done right, there are ways to grow the relationship further. With broadband, you could offer deeper programming — older shows, specialty programming — which may result in incremental revenue and fees.

ZD: Users want to know: why should I give up Hulu, TV.com or my Slingbox or Sling Mobile service?

DS: I’m not convinced that these are replacements. If you were to have a deep level of programming through Comcast, I don’t think that necessarily means you’re no longer interested in going to Hulu. Hulu may have short clips and other programming that Comcast has chosen not to include. It’s still at an early stage. The embracement of short-form content, like snippets of Saturday Night Live and news broadcasts — that hasn’t cannibalized TV viewing. It has generated more interest. Sites like Hulu won’t go away — they’ll supplement these other services.

ZD: Without technical restrictions on the Internet, how does online on-demand affect local programming? Will there be a way to take local programming outside of the market (say, for regular season sports games)? Can I watch American TV abroad?

DS: Local programming has always been one of the strengths that cable operators have had. That’s been a big part of building the connection with the community. Technically, you could geo-filter or create protections around that to allow subscribers to have access based on business rules. The technology is available to support that. The bigger question is around rights — broadcasters, sports leagues — and how they’re negotiated. How are they constructed? Do you give access to a region, or a region-based account?

The technology’s not preventing it. It’s more of a windowing strategy.

ZD: What about sports leagues that have their own full-season, all-access channels? How will they cope?

DS: The leagues have divided their content into packages well. They’ve been very good at thinking about access to the packages — what device, what platform, what portion of league play goes into a package. As consumption patterns change over time, those deals will evolve as well.

ZD: How long can a provider like Comcast hold out against TV.com or Hulu before it goes free?

DS: The fees paid to distributors are a critical part of their financial stability. The cost of premium programming is very high. If you were to lose that and function solely as a free-to-consumer proposition with ad support, it puts pressure on distributors’ ability to invest in the same kind of resources to create that programming. We’ve seen that phenomenon affect programming already — the prevalence of reality programming that is low cost to produce. In the longer term, are we going to see everything move to free without support to distributors? In the long run, consumers don’t want that. They want high-quality programming. It’s not all that they want, but it’s part of it.

That’s why it’s in the networks’ interest to preserve part of that economic model. As a consumer, while I love access to free programming, I also appreciate what the cable operator does for me. Organized and bundled into one service, billing is in one place; a single service with a single bill that’s managed. There’s a company standing behind that service that can support it if there’s an outage.

There is already a very substantial competitive environment right now between providers, distributors, telephone companies — that pressure will only increase. But, I do think there’s an opportunity for cable operators to say, “You’ve thought of my broadband in terms of speed, up time, access — technical attributes — but we provide all the great programming that you’ve come to expect. We can also provide that to you across your devices, and because we have a relationship with you, we can do interesting promotional and viewing offers that, over time, you can start watching something on one device and finish it on another.”

ZD: What about restriction of content? Have cable distributors learned from the pitfalls of the music industry’s fight for DRM and restricted content access?

DS: Viewing TV and movies — versus listening to music — the presentation varies device-to-device. There are movies, for example, that I prefer to watch on my TV, even if it’s available on my mobile. I want that experience. There’s other programming that I enjoy in shorter form clips or don’t mind in lower quality. Mixing and matching the content to the device is the trick, as opposed to offering identical versions of everything across all platforms. All the companies are carefully considering their “windowing strategy” — how content is incrementally released to markets — and [as a result] we’ve seen content available sooner, global releases, a shrinking gap between theatrical and home entrainment releases. The gaps between the windows are shrinking, and the windows themselves are shrinking and rearranging. It’s in part to combat piracy, and it’s also driven by the marketing to build consumer attention to a title.

ZD: So how does this affect TVN?

DS: We’re excited about this because we handle management of digital content, for TV and for broadband viewing. They’re all thinking about making programming available to consumers, our business evolves because of those changes.

Interview has been edited for clarity.

More on ZDNet:

• Sean Portnoy: Cable, satellite companies look to bring TV programming online. Believe the hype?

More from around the web:

• WSJ Digits: The Minefield of Online Cable-TV
• Wall Street Journal: Cable Firms Look to Offer TV Programs Online
• Business Insider: The Cable Companies’ Evil Plan To Take Down Hulu
• Business Insider: More Details About Comcast’s New ‘OnDemand Online’

February 27th, 2009

News to know: Dell; Azure; Yahoo reorg; Facebook; Oracle

Posted by Larry Dignan @ 2:00 am

Categories: General

Tags: Facebook, Larry Dignan, Dell Computer Corp., Oracle Corp., Yahoo! Inc., Microsoft Corp., E-books, Netbooks, Nettops & MIDs, Leadership, Strategy

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.

Mary Jo Foley: Azure: One big, happy platform?

• Microsoft: Here are some of the Win 7 changes coming in the next build
• Adrian Kingsley-Hughes: Microsoft outlines Windows 7 RC changes

Larry Dignan: Dell’s fourth quarter sales stumble; Plans more cost cutting

Sam Diaz: Bartz announces new management structure at Yahoo but offers no details

• BBC hires Yahoo exec as CTO
• Yahoo CFO Jorgensen resigns
• Photos: The Bartz gang–a breakdown of Yahoo’s reorg
• Techmeme

Dennis Howlett: Facebook’s juvenile approach to TOS

• Sam Diaz: Facebook invites users to chime in on new Terms of Service
• Zack Whittaker: Facebook lets users govern worlds largest social network
• Facebook: Facebook Opens Governance of Service and Policy Process to Users

Gallery: Best entry level retail laptop: the HP G60-235DX (right)

Tom Foremski: How will the recession affect Silicon Valley?

• Hard times hit Bangalore
• Dana Blankenhorn: Open source for hard times

Jennifer Leggio: Debunking social media myths? Put the FUD gun away

John Morris: Who’s got the top 10-inch netbook?

O’Grady: More Snow Leopard screenshots and video leak out

Andrew Mager: A mashup of Twitter and Wikipedia: 140pedia.com

Christopher Dawson: See, really, Edu Apps is OK

• There must be a way to use this little guy
• Imagine if Twitter became a Google App

Harry Fuller: Who’s to blame for America’s loss of innovation?

• Everybody needs…water. But there’s optimism.

February 26th, 2009

Dell's fourth quarter sales stumble; Plans more cost cutting

Posted by Larry Dignan @ 1:53 pm

Categories: Dell, General

Tags: Revenue, Dell Computer Corp., Sales, Operational Accounting, Finance, Larry Dignan

Dell’s revenue fell 16 percent in the fourth quarter, but the company was able to top Wall Street expectations courtesy of cost cutting. Dell indicated that it will now aim to save $4 billion in expenses by 2011, up from an initial $3 billion target.

Dell reported fourth quarter earnings of $351 million, or 18 cents a share, on revenue of $13.4 billion, down 16 percent from a year ago. That earnings figure (statement) included a pretax charge of $277 million, or 11 cents a share, related to restructuring. Excluding that charge, Dell would have had earnings of 29 cents a share. Wall Street was expecting earnings of 28 cents a share. Dell reported earnings of $2.47 billion, or $1.25 a share, on revenue of $61.1 billion for fiscal 2009.

Simply put the fourth quarter was difficult for Dell and the company isn’t expecting much improvement. Here’s the outlook (emphasis added):

Dell believes that global IT end-user demand will continue to be uncertain and challenging. The company will maintain its focus on areas that it can control, especially those that benefit customers, including product quality, services and costs. Dell’s new global organization aligns the company even more closely with different types of customers, to best understand and efficiently act on their needs. Dell will continue to manage its mix of products and services to optimize liquidity, profitability and growth. The company expects to absorb organizational effectiveness expenses in the first quarter of fiscal 2010 at a similar level as in Q4, as Dell further streamlines its business to improve competitiveness.

That translates into the following:

Dell CFO Brian Gladden noted that the company had a plan to cut $3 billion in expenses by 2011 and it now plans on cutting $4 billion. On a call with analysts, the company was asked for details about the additional $1 billion in cuts, specifically whether it involved a signification headcount reduction. Gladden wouldn’t comment about “specific headcount impact” but went on to say that the reduction would involve “a broad set of initiatives that covers every segment.”

Add it up and Dell will continue to cut costs amid weak IT spending. HP has the same playbook.

Here’s Dell’s fiscal 2010 plan:

Dell CEO Michael Dell also fielded questions on the call about Windows 7 and the growth of netbooks. He said the company is excited about Windows 7 and, recognizing that customers will defer their purchases until its debut, said the company is talking to customers about being ready for Windows 7. As for netbooks, Dell said the still sees them as having a relatively low share of the consumer market and that there hasn’t been much demand from business customers, which still prefer larger-screen notebooks.

By the numbers:

• Mobility revenue fell 17 percent in the fourth quarter from a year ago to $4 billion. Desktop PC fourth revenue was $3.53 billion, down 27 percent. Software and peripheral revenue fell 6 percent $2.48 billion. Servers and networking revenue fell 16 percent to $1.37 billion. Services revenue in the fourth quarter was $1.35 billion, down 3 percent. Storage revenue in the fourth quarter was $692 million, up 7 percent from year ago.
• Dell’s consumer business saw fourth quarter revenue fall 7 percent to $3 billion. For the fiscal year, consumer revenue was up 11 percent to $11.5 billion.
• Dell’s commercial business tanked in the fourth quarter with revenue falling 18 percent to $10.5 billion. For the year commercial revenue was down 2 percent to $49.6 billion. In the fourth quarter, notebooks, desktops and servers units were down 22 percent, 21 percent and 18 percent, respectively.
• Server, storage and services account for 50 percent of Dell’s gross profit.
• Dell’s headcount at the end of the quarter was down 11 percent from a year ago to 78,900.

February 26th, 2009

Facebook invites users to chime in on new Terms of Service

Posted by Sam Diaz @ 12:03 pm

Categories: Facebook, General, Legal

Tags: Facebook, Public Relations, Marketing, Corporate Communications, Sam Diaz

Facebook today announced bold steps to recraft its Terms of Services agreement - the legal agreement between the site and its users - by inviting users to review, comment or even cast a vote to help simplify and shape the language of the new agreement.

The company took a PR beating earlier this month when a blog exposed changes to the site’s TOS. The blogosphere blew up and slammed the company for making the changes with no real notice to its users (as it’s legally allowed to do under the original TOS) and highlight in detail what the changes were. The biggest exclusion was two sentences that previously had allowed users to delete content they uploaded to their accounts when and if they cut their ties with Facebook.

On a conference call with reporters today, CEO Mark Zuckerberg said the company was never trying to take ownership of the content that’s uploaded to the site. He also noted that the user backlash showed the company how passionate its users are and that many of them also have a sense of ownership when it comes to Facebook. It’s not the first time users have rebelled against the service. They rebelled over the Beacon ad system and, going back to the early years, also cried foul about the News Feed portion of the site.

When it comes to lessons learned, the third time just might be the charm for Facebook.

The company is opening two documents - proposed Facebook principles and a proposed Statement of Rights & Responsibilities - to scrutiny by any Facebook member. The purpose of the principles document is to create a foundation for how the rights and responsibilities are determined. The company says:

Principles reflect the philosophy and values we aspire to and will guide us in reaching our goal of making the world more open and connected – which we believe will promote greater understanding and transparency around the world.

The proposed Statement of Rights and Responsibilities, which will eventually replace the old Terms of Service, is being crafted with three major issues in mind:

• “Forever won’t work: Facebook’s use of our content has to have clear limits.” We sought to address this comment in a number of ways. First, we make it clear that users own all of their content. Second, we removed the terms “perpetual” and “irrevocable” from the license grant we receive from our users. Third, we make it clear that this license ends when you delete your content or your account. And finally, we make it clear that we can only use your content in a manner consistent with your privacy and application settings.
• “Opt-in only: Facebook can’t just change the terms whenever they want.” We sought to address this comment by adopting a virtual Town Hall process for providing users with notice of proposed changes and an opportunity to comment, as well as an opportunity to vote where certain thresholds are met.
• “Write it in English: No legalese (or Latin!) please.” We sought to address this comment by making the proposed Statement simpler and shorter, and avoiding legal terms where possible. That said, some legal concepts demand the use of very specific legal wording, so it is not possible to avoid all legal language. We look forward to your views regarding whether we accomplished our goal to make the Statement clear.

It’s unknown still what sort of feedback the company might get and how that might impact the new language. Personally, I had no problems with the last set of changes to the language but was more upset that the company made the changes without any sort of real notification. I’m encouraged by these three issues highlighted by the company and commend Facebook for being responsive to the concerns raised earlier this month.

February 26th, 2009

Bartz announces new management structure at Yahoo but offers no details

Posted by Sam Diaz @ 10:00 am

Categories: General, Yahoo

Tags: Yahoo! Inc., Bartz, Blogging, Internet, Sam Diaz

(update below with details of the new management structure)

Yahoo CEO Carol Bartz announced a management reorganization this morning in a blog entry titled “Getting our house in order” but offered no specifics on who’s in and who’s out. What we do know - via an SEC filing today - is that CFO Blake Jorgsensen is out.

I would think that’s related to the management shakeup but it’s hard to say. After all, if you’re getting ready to can someone one day, do you really put them on stage the day before at a major conference like the Goldman Sachs Technology Conference? I listened to the webcast of the event yesterday and Jorgensen - in my opinion - came across as a loyal soldier.

An excerpt from Bartz’ blog entry:

I’ve been on a whirlwind tour for the last six weeks, talking with everybody from executive leaders to the guys who configured my laptop. I’ve been in student mode, slowly getting smarter about what makes this place tick. And most recently, I’ve been gathering information on what it’s going to take to get Yahoo! to a great place as an organization –- and one that brings you killer products.

People here have impressed the hell out of me. They’re smart, dedicated, passionate, driven, and really nice. There’s so much great energy and frankly lots of optimism. But there’s also plenty that has bogged this company down. For starters, you’d be amazed at how complicated some things are here.

So today I’m rolling out a new management structure that I believe will make Yahoo! a lot faster on its feet. For us working at Yahoo!, it means everything gets simpler. We’ll be able to make speedier decisions, the notorious silos are gone, and we have a renewed focus on the customer. For you using Yahoo! every day, it will better enable us to deliver products that make you say, “Wow.”

update:

Carol Bartz’ memo to employees outlining the new changes in Yahoo management has been posted on AllThingsD’s Boomtown blog and the Management page on Yahoo’s corporate site has also been updated. (See image)

It’s worth noting that CTO Aristotle “Ari” Balogh has had a lot more handed to him with “Executive Vice President of Products” added to his title, making him responsible for “vision, strategy, design and development of Yahoo’s global consumer and advertiser product portfolio.”

In addition, Executive VP Hillary Schneider - who was on stage with CFO Blake Jorgensen at the Goldman Sachs Technology conference yesterday - has been handed oversight of the mobile division.

Yesterday, the company announced that Marco Boerries, the chief of Yahoo’s Connected Life division, was leaving. And earlier this week, former VP and general manager of Yahoo News Neeraj Khemlani said he was leaving the company to accept a new post at Hearst to help with its digital transition.

Company president Sue Decker, who had been a contender for the CEO job and then resigned when Bartz was hired, is still listed as part of the management team, which must mean that the transitional period she has been sticking around for must still be in progress.

The following is the full memo from Bartz:

New Yahoo! Management Structure Overview

February 26, 2009

· Our goal as a company is simple: to consistently deliver awesome consumer and advertiser experiences everywhere in the world we do business. So we’re creating an organization to enable improvements in our product quality and operational efficiency, as well as clear decision making and accountability.

· Tech and Product groups will be combined to create a single organization called Products. Products will be led by Ari Balogh as EVP of Products and CTO, reporting to Carol Bartz, with the goal of enabling extraordinary consumer experiences tied to compelling advertiser and publisher offerings. This organization is responsible for the vision, strategy, and quality of every product we create–regardless of region, device format or category.

· There are now two regions–North America and International. The regions are responsible for delivering Yahoo!’s products, programming and services to consumers, partners and advertisers in local markets. North America will be led by Hilary Schneider, EVP, North American Region, reporting to Carol Bartz. International’s leader will be hired soon.

. Mobile will continue to be a key priority for Yahoo!. Going forward, David Ko will lead the mobile business, strategy and monetization teams for Yahoo! (Head of Global Mobile Business, reporting to Hilary Schneider). All of our product teams will be responsible for incorporating mobile innovations into their products.

· A Chief Marketing Officer (CMO) role has been created to oversee our global marketing strategy and provide direction for our marketing function. Today, we named our new CMO, Elisa Steele. Elisa starts on March 23. She will bring together the various marketing teams that have been spread across the company.

· A new Customer Advocacy group will help us to better hear the voice of the customer (consumers/advertisers) across the company and incorporate what we hear into all our work throughout Yahoo!. We will hire a new leader for this team.

· The newly created Service Engineering & Operations (SE&O) team will be chartered with delivering common technology services at scale, including application management and infrastructure. The team will be led by David Dibble, SVP of SE&O. We’re bringing Service Engineering together as one group because these engineers bring expertise that is best applied horizontally.

· Our corporate functions will consist of HR led by David Windley, Legal led by Michael Callahan, and our CFO is to be hired, with Blake Jorgensen remaining through the transition. Joel Jones will serve as Carol Bartz’s chief of staff.

· This structure is designed to last two to four years; however, we’ll continue to make adjustments as needed. But we expect this core structure will stay in place.

· These changes become effective immediately.

February 26th, 2009

Yahoo CFO Jorgensen resigns

Posted by Sam Diaz @ 9:22 am

Categories: General, Yahoo

Tags: Yahoo! Inc., Conference, CFO, Company, Search, Sam Diaz

Yahoo CFO Blake Jorgensen, who addressed analysts at the Goldman Sachs Technology Conference in San Francisco yesterday, has resigned from the company. In a very brief SEC filing, the company wrote:

On February 26, 2009, Yahoo! Inc. (the “Company”) announced that Blake Jorgensen, Chief Financial Officer of the Company, will be leaving the Company. The Company has initiated a search for a new Chief Financial Officer. Mr. Jorgensen will remain with the Company as its Chief Financial Officer through a transition period.

He was pretty much a Yahoo cheerleader during the Goldman Sachs event, speaking freely about the company’s transition period with new CEO Carol Bartz on-board, as well as the company’s approach to partnering with someone - presumably Microsoft - with its search business.

Maybe he said something he shouldn’t have said at the conference. Maybe Bartz didn’t care for what he said about her. Maybe this is all part of her big reorganization plan, which was supposed to be announced this week. Maybe he just got another sweet job offer after calling it a day at the conference yesterday. The filing didn’t have those sort of details.

Update: A Barclays analyst shot off a quick note this morning, criticizing Yahoo for having Jorgensen represent the company at yesterday’s conference when he was already on his way out the door, according to a post on paidcontent. Analyst Dough Anmuth writes:  “We think some investors viewed him as potentially providing some stability to the management team”  but adds that he isn’t surprised as much as he is “increasingly concerned about Yahoo!‘s thinning management ranks & about who internally will help guide new CEO Bartz as she moves deeper into the Internet space & soon makes critical strategic decisions for the company.”

Update: Bartz announces new management structure at Yahoo but offers no details

February 26th, 2009

Oracle and the great innovation debate

Posted by Larry Dignan @ 8:23 am

Categories: ERP, General, Oracle, Software Infrastructure

Tags: Innovation, Oracle Corp., Leadership, Strategy, Management, Larry Dignan

Does Oracle innovate or just suck maintenance revenue out of your budget like a vampire?

It’s a question that has been asked a lot this week and there’s a nice back and forth about the topic among Dennis Howlett, Vinnie Mirchandani, Paul Greenberg, Josh Greenbaum and Bob Warfield. Oracle spokeswoman Karen Tillman has also chimed in a good bit (guess where she falls on this pendulum). Vinnie, who got a plug by Salesforce chief Marc Benioff on the company’s earnings conference call, has the recap of the week. 

I’m not going to pretend to have a definitive answer on whether Oracle innovates. Frankly, I’m not playing with the products enough to know–although we do run on Oracle systems internally.

Oracle apps: an innovation free zone since 2006?

Meanwhile, you can debate innovation by product. Is Beehive innovative? Social CRM? PeopleSoft? You could spend months nit-picking about innovation when there are hundreds of products to peruse. 

What I do know is that Oracle’s business model is innovative for the software industry. Remember when Larry Ellison set out with his “I’m going to consolidate the industry” spiel? Most of us thought he was nuts. A bunch of acquisitions later Oracle is still thriving. 

Ellison’s model by itself wasn’t innovative (it’s really a clone of Cisco’s approach) by itself. But for the software industry Oracle’s model was quite innovative. The working theory at the time was you acquire a software company and all the talent splits. Years later we realize that Oracle has managed to assimilate these purchases and keep customers. 

My working theory on that former point is that expectations were so low about Oracle’s acquisition of PeopleSoft that it was able to position itself for the rest of its purchases. Oracle’s takeover of PeopleSoft was predicted to be a disaster in the making. Ellison hired Charles Phillips to keep customers and the sky didn’t fall after all. 

From there, Oracle acquired more companies–Siebel, BEA and others–and hit replay. 

That context on the model really frames the innovation debate. Oracle is so massive that it’s almost impossible to tally up all the little innovations. Perhaps some Oracle new feature would be a lot more buzzworthy at a startup. Twitter in Web 2.0 land is innovative. To Oracle secure Twitter functionality linked to corporate data is a feature. Simply put, Oracle’s innovation, which revolves around processes and a lot of corporate stuff, isn’t nearly as sexy–or easy to decipher. 

My bottom line, which is going to look like a total cop-out, is that Oracle innovates in some places but could probably do a lot better. And if customers demand more innovation Oracle is quite capable of delivering–or at least acquiring a company that can.  

Also see:

Oracle CRM - Innovation Free or Innovative?

Salesforce.com: High maintenance costs are pushing customers to us

February 26th, 2009

Salesforce.com: High maintenance costs are pushing customers to us

Posted by Larry Dignan @ 5:48 am

Categories: Cloud computing, Earnings, Economy, General, SaaS, Salesforce.com, Software Infrastructure

Tags: Salesforce.com Inc., Customer, Sales Force Management, Sales, Larry Dignan

Salesforce.com delivered strong fourth quarter results that put CEO Marc Benioff in a more chatty mood than usual. The big takeaway: Salesforce.com is using high maintenance costs from big vendors like Oracle and SAP to its advantage. 

First, the financial figures. Salesforce.com reported fourth quarter earnings of $13.7 million, or 11 cents a share, on revenue of $289.6 million, up 34 percent from a year ago. Wall Street was expecting earnings of 7 cents a share. 

International sales were 28 percent of Salesforce.com’s total. But more importantly deferred revenue rose $124 million from the third quarter to $594 million. Much of that boost is seasonal though as the company expects deferred revenue to fall in the first quarter. 

Salesforce.com also provided a fiscal 2010 outlook that was solid (conference call transcript). The company is projecting annual revenue of $1.3 billion to $1.33 billion and earnings of 54 cents a share to 55 cents a share. Wall Street was expecting earnings of 50 cents a share. For the first quarter, Salesforce.com projected earnings between 10 cents a share and 11 cents a share on revenue of about $304 million to $305 million. 

Now that Salesforce.com has officially hit the $1 billion revenue mark the fun really begins. The $1 billion mark for software companies is either just a hurdle to clear on the way to becoming a much larger company or an area where former fast-growing firms stagnate. 

Indeed, Salesforce.com executives did note that invoicing patterns are being closely watched even though customers haven’t altered behavior in the downturn. And Salesforce.com will now have to begin monitoring customer attrition. For now, attrition rates at Salesforce.com are less than 1 percent, but that’s likely to increase in fiscal 2010, according to the company.

Nevertheless, Benioff highlighted a few key points on the earnings conference call. 

Maintenance costs are a boon for Salesforce.com. Benioff said:

We added roughly 3,600 net customers during the fourth quarter to bring our total net paying customer count to more than 55,400. That’s an increase of roughly 14,000 customers for the year, more customers than we added in our first six years of business.

These new customer additions are key to our growth strategy not only because they result in new business today, but because of their growth potential in the future. There’s a common theme in the deals we won in the fourth quarter. Customers are taking a hard look at the maintenance payments that they’re making to enterprise software companies and replacing those stagnant legacy technology costs with predictable scalable subscriptions in constant built-in innovation of cloud computing.

Whether it’s our Salesforce CRM sales, customer services and support, or Force.com platform, customers are choosing the low cost, low risk, and fast results of cloud computing over expensive hardware, software, and data centers that burn through precious capital and yet rarely produce the promised returns. In face offs with Oracle, Microsoft, and SAP, customers moved to the cloud in record numbers in FY ‘09.

SAP and Oracle are the big targets for Salesforce.com (and the feeling is mutual). Benioff said he poached Oracle customers CMC, Canon, Corporate Executive Board, DeVry, Equinox, Axiom and beat Larry Ellison and the gang with CRM wins at Cigna Health, Epson and Williams Scotsman. Regarding SAP, Benioff said Salesforce won deals at Baker Hughes, AREVA, the Brady Corporation and Lennox International. Now rest assured Oracle and SAP have their wins against Salesforce.com too, but the message is clear. Benioff is pitching maintenance costs as a way to go SaaS. 

Applications on the Force.com platform passed the 100,000 mark. 

There is a bit of a disconnect here though. Salesforce.com is pitching lower costs for its services yet potential customers are worried about total cost of ownership and lock-in. You can get locked into a cloud as well as legacy software. Here’s a look at Forrester Research’s recent survey on SaaS:

Can Salesforce.com allay those worries and hit another billion or so in sales?

February 26th, 2009

CEO vs. CIO faceoff: Doing more with less has limits

Posted by Larry Dignan @ 5:08 am

Categories: General, IT Management

Tags: Team, CIO, CEO, Team Management, Strategy, Management, Larry Dignan

February 26th, 2009

News to know: Congress; Newser; Apple; VMware; High-speed rail

Posted by Sam Diaz @ 2:00 am

Categories: General, News to know

Tags: Google Inc., Dana Blankenhorn, U.S. Congress, Mary Jo Foley, Apple Inc., VMware Inc., Sam Diaz, Netbooks, Nettops & MIDs, Cloud Computing, E-mail Providers

Harry Fuller: Confronting Congressional hypocrisy

• The U.S. is losing it

Tom Steinert-Threlkeld: Newser Versus The New York Times, Revisited: Who’s Copying Whom?

Andrew Nusca: Apple director: ‘no change’ in Jobs’ plans

• Sam Diaz: No Twitter blasts from Apple shareholder’s meeting?

Dan Kusnetzky: VMware’s cloud computing announcements

Harry Fuller: Rail–even more controversial than nuclear?

• High speed rail: derision or da future?

Adrian Kingsley-Hughes: Is the new browser war a good thing for end users?

Christopher Dawson: Stop bashing social networks

Andrew Nusca: Intel joins Dell in fight against ‘netbook’ trademark

• Jason D. O’Grady: Don’t ignore the netbook

Zack Whittaker: Office Live Workspace: more features, more storage

Joe Brockmeier: What makes good governance?

Garett Rogers: Google App Engine to start charging for usage

Chris Jablonski: ETech 2009 Preview

Andrew Nusca: Nokia may enter laptop industry, CEO says

Mary Jo Foley: SQL Data Services to get an overhaul

Heather Clancy: Oklahoma! Where the wind comes sweeping down the plains.

Mary Jo Foley: New Microsoft patent-infringement case involves Linux

Ryan Naraine: Google wants to buy Native Client security flaws

Sam Diaz: Yahoo execs talk Bartz, search deal and new opportunities

Matthew Miller: 375 priced apps appear in the Android Market after one week, are any worth the price?

• Gameloft bringing 20 titles to the Google Android platform

Richard Koman: Atlantis still lost, sea lines explained

Harry Fuller: Solar stocks: sunny side down

Sam Diaz: Intel: Economy hurts but there are bright spots

Andrew Nusca: Nortel to cut 3,200 more employees

Mary Jo Foley: MSDN, TechNet subscribers get Vista SP2 RC bits

Dancho Danchev: Malware campaign at YouTube uses social engineering tricks

Paul Greenberg: Oracle CRM - Innovation Free or Innovative?

Sam Diaz: More iPhone vs. Storm: Neither was for me

Dana Blankenhorn: Paglo re-branded as SaaS

Heather Clancy: Coolerado looks to sun to keep things cool

Michael Krigsman: San Diego fires Axon over ERP implementation problems

Christopher Dawson: Cart troubles

Richard Koman: Music industry blames PirateBay for losses

Larry Dignan: The Kindle 2 debate: If a robot reads a book is it an audio book?

Ryan Naraine: Adobe swings and misses as PDF abuse worsens

Andrew Nusca: U.S. Supreme Court rules for AT&T in antitrust suit

Zack Whittaker: Has Internet Explorer 8 been released? No.

Dana Blankenhorn: Open source becomes irresistible political force

Andrew Nusca: Worldwide semiconductor revenue to decline 24% in 2009

Dana Blankenhorn: Moore’s Law and open source

Joe McKendrick: Four important SOA metrics that need to be watched

Larry Dignan: HP to distribute Sun’s Solaris on its Proliant servers

Zack Whittaker: MSR releases U Rank; jumps on the Google bandwagon

Ryan Naraine: ID thieves go phishing for GTalk, GMail passwords

Phil Wainewright: Did privacy laws bring down Gmail yesterday?

Jason D. O’Grady: Apple TV 2.3.1 update breaks Boxee (Updated 2x)

John Morris: Dell’s Studio XPS to get major upgrades–inside and out

Dana Blankenhorn: Giving away music for African health IT

Matthew Miller: Memphis police department rolls out 1,200 REDFLY Mobile Companions

Dana Blankenhorn: Are we going to single payer anyway?

Matthew Miller: Opera Mini serves up 1 petabyte of data in January 2009

Mary Jo Foley: Red Dog: Five questions with Microsoft mystery man Dave Cutler

Larry Dignan: AMD demos ‘Istanbul’ six-core processor

Mary Jo Foley: Windows 7: Beta testers, not Microsoft, need more feedback

Ed Burnette: Market Moves: Sales disappoint so far

Oliver Marks: Engineers are from Mars, Marketers are from Venus

February 25th, 2009

Yahoo execs talk Bartz, search deal and new opportunities

Posted by Sam Diaz @ 3:11 pm

Categories: General, Google, Innovation, Microsoft, Mobile, Search, Yahoo

Tags: Advertisement, Partnership, Mobile, Yahoo! Inc., Video, Carl Icahn, Business Structures, Corporate Communications, Advertising & Promotion, Finance

It wasn’t even a year ago that conversations with Yahoo executives focused around the (failed) Microsoft deal, a proxy fight with Carl Icahn and a (failed) search deal with Google. Today, the company is talking about what it probably has wanted to talk about for a long time: partnerships, ad opportunities and user engagement.

During a session at the Goldman Sachs Technology Conference in San Francisco, CFO and executive VP Blake Jorgensen and EVP HIllary Schneider were never once asked about Icahn or Jerry Yang. Instead, the two talked about things like growth and new opportunities in video and mobile markets. And they gave some insight into the new Yahoo, the one run by the new, no-nonsense CEO Carol Bartz.

Bartz, they said, is a decisive leader who operates on gut instinct, focuses on simplification and doesn’t seem to tolerate a lax approach. Case in point: the “new sheriff in town,” as Schneider referred to her, doesn’t tolerate tardiness in Yahoo meetings and doesn’t have time for “stupid questions.” Bartz, they said, comes from the “school of KISS - Keep It Simple, Stupid.”

Sounds to me like ol’ Carol is cracking the whip and buckling down - something the company needed, huh?

Also see: Yahoo’s pending reorg: All Bartz has to do is simplify

Jorgensen and Schneider spent some time talking about search, specifically the hot topic of whether a search deal or even sale of that business segment - presumably with/to Microsoft - is in the works. Jorgensen said the company “is not opposed to a deal that would maximize the value of the business, be it a partnership or sale in the long term” but was quick to point out that search is a complex business that connects - literally, on servers - with other elements of the business, such as Mail and Messenger. He said:

It’s difficult to draw a line down the middle of the organization and split it into two. That doesn’t mean it can’t be done. It could. But we’d want to do it right.

Also see: Should Yahoo sell search or keep it as a buffer?

Schneider spent some time talking about two areas that don’t get a lot of attention - video and mobile - and how the strategies in those spaces are positioning the company for the future.

For video, she offered an examples of Tech Ticker and the “phenomenally successful” Yahoo Sports Minute, relatively low-cost, in-house video productions that have found sponsors in Scottrade and Dunkin Donuts. The partnership with Dunkin, for example, is an example of identifying and reaching a very specific demographic - time-strapped male commuter who wants a quick recap of the sports headlines and might also want a donut and some coffee on the way to the office in the morning.

In terms of mobile, the strategy involves partnerships with the major providers, which allows the company to drive technology, notably around e-mail, which has been one the first mainstream applications to be adopted in mobile (thanks to the Blackberry for the kickstart). Mobile, Jorgensen said, is still a nascent market, one where no one is really generating ad dollars yet. When that market does open, Yahoo will be well positioned with its partners, he said.

Overall, it was refreshing sort of peek into Yahoo and it was clear from even the questions being asked by the analysts that fears about the company’s future have seemed to calm since Bartz came on-board. Yahoo isn’t out of the woods yet - after all, Bartz has only been on-board for a little over a month. But it’s definitely nice to talk about strategies again and put all of that in-fighting behind us.