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Asia to see more chief customer officers

Chief customer officers (CCOs) are largely unheard of in the Asian business world, but industry players say they expect greater prominence for the role as more companies realize that successful customer relations go beyond sale transactions or be confined to the responsibility of one department.

According to them, firms are increasingly recognizing that a CCO is integral to strategizing and ensuring a consistent, powerful customer experience reverberates throughout the entire organization.

Felicia Leung, chief customer officer at Prudential Assurance Singapore, told ZDNet Asia that the CCO role was created to “specifically establish a customer experience strategy for the company that would support our long-term growth aspirations”. Leung, who became CCO 18 months ago, has worked with the insurance giant for 13 years.

Customer experience is the next competitive battleground, and companies that can do this well will reap the rewards,” Leung pointed out in an e-mail.

Focusing on customer experience, she explained, goes beyond front-line customer service, complaint management or call centers. It is about the organization considering how a customer experiences the company and its brands, or “all critical interaction points”, she added.

The overarching responsibility of the CCO is “to bring the voice of the customer into the organization”, and this means it is imperative to understand customers’ expectations, and work with all parts of the organization to deliver an experience that meets or even exceeds those expectations, the Prudential CCO elaborated.

Another CCO, Jim Steele from Salesforce.com, said his role was created because “you can’t separate sales from customer success”. Steele became CCO two years ago and is also the president of international operations at Salesforce.com, where he has worked for over eight years.

Having a CCO “changes the discussion with customers”, Steele said in an e-mail. “My conversations [with customers] have less to do with what they’re going to buy, and more to do with how they can be more successful. This allows for a more open discussion…If customers think I’m there to sell them something, they’d be more guarded.”

He added: “As a CCO, I’m looking for that transformational experience [and] not just selling technology. I’m trying to give them an experience nobody else has.

“This approaches changes the game for us, it changes the conversation.”

David Ang, executive director of Singapore Human Resources Institute (SHRI), said in a phone interview the fundamental task of the CCO is to look after the interests of the customers. However, he also emphasized that the focus on customers has shifted from merely transactional to a strategic one.

It is no longer just attending to and solving the customer’s problem; instead, the “customer’s perspectives, needs and wants are [strategically] built into the organization”, he explained.

CCO largely unknown in Asia
According to Prudential’s Leung, the CCO or a similar role that links different parts of an organization to provide a holistic customer value proposition and delivery system, is relatively new in Asia.

Instead of identifying how every department in a company contributes to the overall customer experience, there is still a tendency to view customer interaction as belonging to a specific function, such as the customer service or marketing department, she noted.

SHRI’s Ang added that the CCO position is mostly new to local enterprises, adding that the role tends to be associated with multinational corporations (MNCs) or global corporations.

Annie Lim, manager of IT commerce division at Robert Walters, also reported in an e-mail the recruitment agency has not yet seen a demand for such a role among its clientele.

Over in the United States, the majority of CCOs have less than two years of experience and come from internal ranks, a Forrester Research study of 155 CCOs revealed. In a blog post in January, Forrester analyst Paul Hagen said 82 percent of the respondents had been in the role for two years or less, while 83 percent are internal hires who have been with their companies for an average of eight years.

Companies that currently have CCOs include South Korean electronics company LG and imaging giant Kodak–both positions were created last year and filled after an internal search.

Not all companies, however, see value in creating a CCO position. Local bank DBS opted to create a customer experience council (CEC) chaired by the CEO, to oversee strategic service agenda, as well as anticipate and address customer service needs, said Paul Cobban, its managing director. He added in an e-mail that DBS also has customer experience leaders for different specialty areas such as retail, technology and operations.

CCO to rise in prominence
While the CCO profile is currently relatively low both in Asia and globally, the pool of customer chiefs is set to grow, observers pointed out.

A consumer-centric digital age–thanks to the prevalence of social media and Web 2.0–will spur companies to call for a CCO with the right capabilities and qualities to ensure their business thrives, said Sue Lou, course manager of Diploma in Marketing at Temasek Polytechnic’s School of Business.

Consumers today have greater access to information and command over media consumption, and these changing trends in the new media environment are affecting the enterprise–making business leaders sit up and notice that traditional approaches to customer service and marketing are no longer sufficient, Lou explained in an e-mail.

Hence, with the rise of a customer-centric focus and accountability, it is logical to expect that the CCO would become an essential member of the C-suite of corporate leaders, she added.

Prudential’s Leung concurred, noting that there is an accelerated realization among companies that what attracts customers to choose a brand and stay loyal to it, is “shifting from just pricing and transactional excellence to one that delivers a unified experience that satisfies on the physical and emotional level for the customer”.

Therefore it is likely that the business world will see more management focus in such a CCO role in the future, she pointed out.

Steele of Salesforce.com also highlighted that the cloud-based subscription model has also made it more crucial for companies to step up customer engagement and ensure a positive experience. “We earn the sale every single time, [so] retention is just as important as the initial sale.”

In addition, in today’s “Google and Facebook era, we are at the forefront of a revolution in how companies and their customers engage and communicate”, and this opens up a world of possibilities for companies to build stronger relationships with their customers, he said.

Because the most successful companies tend to be customer-focused ones, companies will soon create CCO roles, Steele pointed out. The CCO, he added, is “especially important in Asia”, because of its diversities in country, culture and language, which makes maintaining a consistent customer experience even more important.

DBS’ Cobban added that there is competition among organizations to take advantage of Asia’s growth and increasing consumption. This competition will drive innovation in all areas including service, he said, and that in turn will spur organizations to have a CCO or its equivalent to focus holistically on the costumer.

 

 

Retailers inert to mobile payment call

Due to a lack of understanding around mobile payment technologies such as near-field communications (NFC), the smartphone has not yet made significant inroads into brick-and-mortar retailers’ communication and sales strategies, analysts have observed.

These industry watchers told ZDNet Asia that merchant adoption of mobile technologies is largely scattered and limited, in spite of ballooning smartphone ownership and hype around mobile wallets and advertising.

Adoption has been “mostly poor” in recent years, with trials and commercial rollouts from time to time, said Jean-Noel Georges, Frost & Sullivan’s global program director for ICT focusing on smart cards practice, in an e-mail.

Likewise, Ben Cavender, associate principal with China Market Research Group (CMR) said uptake rates among retailers are “still very much in the nascent stage”. Many retailers are interested in some form of mobile commerce, but have no prior experience and “lack an understanding of how to implement the technology” and the cost involved, he noted in an e-mail.

Analysts also pointed to the legacy of existing mechanisms such as cash and cards, which hinder newer technologies from gaining a foothold in the retail transaction space.

Howard Wilcox, senior mobile commerce analyst at Juniper Research said in an e-mail the percentage of retail sales made by mobile payments (m-payments) is still very small in comparison to cash, credit and debit cards.

Ovum’s senior analyst of cards and payments, Gille Ubaghs, added that card technology is “not that new or sexy”, but is very easy to use and “poses few problems or inconvenience to consumers”.

“Mobile payments in and of themselves are not enough to entice consumers away from a tried and tested technology,” he pointed out in an e-mail.

Hurdles remain for NFC
According to a Frost & Sullivan report, NFC could see a rise in uptake this year, as the technology moves from the realm of innovators to early adopters. The market research firm also predicted that NFC payment value globally will amount to 111.2 billion euros (US$155.2 billion) in 2015.

The “presence of a large vendor like Apple moving into the NFC space could undoubtedly change the current NFC landscape, enabling mainstream NFC adoption”, Tarik Husain, global director of mobile commerce at Sybase 365, said in an e-mail.

Last August, the tech giant was rumored to be testing NFC chips on an iPhone prototype. Citing a source with links to Apple engineers, Bloomberg in January reported that the company is planning services that allow customers to pay for purchases using its NFC-enabled smartphone and slate devices.

Nonetheless, Husain acknowledged that there are still barriers to NFC adoption among merchants. He said the biggest hurdle is not the cost of replacing infrastructure to support NFC, but educating both retailers and consumers about the technology and why they should use it. Consumer habits have to be changed, for one, and large retailers such as WalMart could take years to establish and execute processes for training and implementation, he pointed out.

Another reality check, added Husain, is that in Singapore, for example, the average retailer “has too many devices on the counter” and adding another terminal can “create problems”.

David Chan, MasterCard’s head of customer delivery for South and Southeast Asia, noted that cost may also hold back merchants. Those already equipped with POS (point-of-sale) terminals may find it costly to upgrade to systems that can support m-payment.

Chan added that MasterCard is working toward greater NFC penetration as increasing number of consumers are being equipped with contactless payment options such as MasterCard’s NFC mobile PayPass system.

Rival payment provider Visa also announced at this year’s Mobile World Congress in Barcelona a commercial rollout of its NFC-enabled Paywave mobile payment system in the United States. The service is expected to be available during the second quarter of 2011.

LBS still largely untapped
According to Ryan Lim, business director of social media marketing firm Blugrapes, location-based social media benefits merchants by providing them the means to track their foot traffic and the ability to offer localized and relevant promotions to walk-in customers.

The concept of close proximity helps encourage in-store sampling and improve impulse buying because it cuts through the “already very crowded and noisy” advertising mediums, Lim explained in an e-mail. Merchants have an increased ability to reach out to consumers on the move via a very personal and interactive device such as the mobile phone, he added.

Lisa Chai, senior marketing and communications manager at Wing Tai Clothing, said in an e-mail location-based services (LBS) such as Foursquare can enhance the shopping experience and generate a high level of engagement and interaction with shoppers. This leads to more targeted marketing efforts and in turn translates to sales, she pointed out in an e-mail.

The Singapore-based company, which manages a number of fashion labels, launched a Foursquare campaign last May for Topshop and Topman customers. These customers were rewarded for checking in at participating outlets using the Foursquare app on their mobile phones.

Blugrapes’ Lim explained that there has yet to be critical mass in LBS adoption because both merchants and consumers lack an understanding of what LBS can offer and how they can benefit from the technology.

“Without sufficient case studies that companies can learn from, marketers have neither references nor ideas on how to generate compelling LBS campaigns, plus venturing into the unknown can be too uncertain or experimental for most traditional marketers,” he pointed out.

Barcode not quite universal
And while barcode technology has existed for many years, some merchants are finding it an effective option for m-payment.

Since January this year, Starbucks cardholders in the United States have the option of paying for their coffee with their smartphones, thanks to the company’s new mobile app. Customers who carry select Blackberry devices from Research In Motion or Apple’s iPhone or iPod Touch can download the Starbucks Card Mobile app to their phone and fund it via PayPal or a credit card. The app generates a 2D barcode on the mobile phone which the costumer flashes at a barcode scanner during payment.

Even though Starbucks’s mobile payment is nationwide in the U.S., Ubaghs from Ovum noted that it is a very specific program based on the coffee chain’s own in-store payment card and cannot be used for other purposes. He argued that it is unlikely smartphone users would want to use different apps for barcodes tied to different merchants.

In addition, while most smartphones can display barcodes, there is still the issue of the merchants procuring optimal barcode scanners, Ubaghs said. Traditional barcode scanners, he explained, emit light and therefore are unable to read off light-emitting mobile screens.

Another Ovum analyst, Martha Bennett, emphasized that what matters to merchants is not the bells and whistles of any particular technology, but the role it plays in managing the customer relationship. The benefits of m-commerce could be a better relationship with the customer, which translates to increased sales, prevention of lost sales, or both, she added.

Bennett, who is Ovum’s practice leader of emerging markets, also highlighted that the absence of a widespread, interoperable and commonly accepted infrastructure would mean the technology will not be adopted regardless of how good it may be.

To her, the root cause of the nascent state of m-commerce in the retail sector is that the m-payment market today is “totally fragmented, with lots of pilot projects, and some larger [retail] chains starting their own deployments”.

Bennett concluded: “Consumers don’t and won’t accept different payment methods for each and every merchant they deal with.”

Digital music to be worth US$7B in APAC

The Asia-Pacific region will account for 35 percent of global digital music revenues, tuning in at US$7 billion by 2015, according to new projections from Ovum.

Released Tuesday, the report revealed that strong demand in subscription services will drive the market’s growth in the region, clocking in a compound annual growth rate (CAGR) of over 28 percent between 2010 and 2015. Worldwide revenues for digital music will reach US$20 billion in 2015.

Among Asia-Pacific economies, China and India will see the highest revenue growth between 2011 and 2015, clocking 56 percent CAGR each, followed by the Philippines at 28 percent. Digital music revenue growth will chime in at 22 percent in Australia and Indonesia; 17 percent in Thailand; 15 percent in Taiwan; 14 percent in Singapore, Hong Kong and Malaysia; 11 percent in Japan and South Korea; and 12 percent in New Zealand.

However, Ovum noted that the Asia-Pacific digital music industry will not yield optimal revenue due to the amount of free music available online.

Ovum analyst Mark Little said in the report: “Digital music will experience what might appear to be healthy growth over the next five years, but there is a danger that this could mask the fact that the industry is not maximizing revenue potential.

“There is too much free music available in the digital economy and not just the illegal kind. Free Internet radio such as Pandora or Grooveshark, and freemium on-demand music services such as Spotify, are offering free music without maximizing advertising or premium subscription revenues for themselves or the industry.”

An increasing number of consumers in the Asia-Pacific region will see the benefits of accessing millions of streamed songs for the price of a CD each month, driving CAGR for music subscription services at over 40 percent between 2011 and 2015.

Demand for such services will also be boosted by Apple, Google and Spotify, which Ovum said will all be launching digital music subscription services this year. The research firm noted Sony unveiled its “Music Unlimited powered by Qriosity” cloud service last month.

Increasing demand for subscription services, alongside the significant amount of music freely available online, have slowed growth of paid online music downloads to just 3 percent last year in the United States. Ovum expects this downward trend to play out in the Asia-Pacific region.

Tech IPOs making a comeback in 2011?

Venture capitalists are mixed on whether 2011–a decade since the dotcom bubble bust–will see the comeback of initial public offerings (IPOs) from tech companies. However, they are unanimous about one thing: investors and companies are savvier today when it comes to the hype and pressures of going public.

“2011 will not mark the comeback year for tech IPOs,” said Dennis Phua, executive director at Singapore-based Azione Capital. In an e-mail interview with ZDNet Asia, he noted that tech IPOs are more likely to occur next year.

Despite news that professional social networking site LinkedIn has filed for IPO this year, Phua argued that other online giants such as Facebook and Twitter would likely opt for another year of private investment before “taking on the downsides of going public”, where they would be more closely scrutinized.

Besides LinkedIn, other online sites such as digital content company Demand Media and music service Pandora have already gone public.

Rather than IPOs, venture capital (VC) firms will be driven this year by the prospect of private sale exits, according to Phua. The likes of Google and Microsoft are expanding horizontally beyond their core businesses, and VCs will aim to “head there and sell out”, he explained.

“Currently there is insufficient IPO interest in tech companies, so the private sale exit [option] is preferred”, Phua said, attributing the lack of interest to unclear revenue models for tech companies. “There have been lessons from the tech bubble of 2000 that companies without good revenue models are unsustainable businesses.”

Phua’s view contrasted with that of Dick Kramlich, a 42-year-old VC veteran, who said in two separate Bloomberg reports that he expects 2011 to be a “breakthrough year” for “blockbuster IPOs” from technology companies.

Michel Birnbaum, general partner from another VC firm, iGlobe Partners, was also upbeat on the tech IPO scene. He told ZDNet Asia in an e-mail that the IPO market for technology stocks started to resurface in 2010.

“In 2011, notwithstanding macro or geopolitical events, we should continue to see a good tech IPO market; and we will certainly see more euphoria if one of more of the Internet ‘all stars’ come to market,” he added.

Birnbaum noted that social media companies are basking in the IPO hype limelight, as such sites have the potential for high valuations and easier capital market success, and hence fees for the banks. These companies can demonstrate revenue traction rapidly and therefore can come to the capital markets in a shorter time span, he explained.

For instance, Facebook, founded only seven years ago, already has more than 500 million users. In January this year, it was valued at US$50 billion after a round of investment amounting to US$1.5 billion. SharesPost, a marketplace for private company shares, pins its worth at US$82.9 billion.

Social networking sites “have tremendous user bases and [some] have not even scratched the surface in terms of the potential to monetize their user base”, Birnbaum summed up.

Different from dot-com bubble
Birnbaum also observed that there is “a significant difference” between the dot-com bubble a decade earlier and companies entering the market now.

Today’s companies, he said, are generating significant commercial revenue and some also show good profit levels. On the other hand, companies during the dotcom era a decade ago were going for the “land grab” and had little to no revenue, to the point that they were loss-making, he noted.

During the dot-com bubble, “business rules were thrown aside” and thanks to the “wild euphoria of the markets”, companies were using capital markets for their next round of venture financing, according to Birnbaum. The model at the time provided early investors with exits, while leaving market investors to take over the losses, he pointed out.

Birnbaum added that with companies today showing a more disciplined approach to growth, market investors should focus on what they see as the continued growth potential of these companies and the valuation commensurating with the growth and risk to sustain it. This is where the hype factor comes in, he said. For instance, if Facebook is worth US$60 billion, then its growth trend must continue at the same pace in order for investors to make money, he explained.

At the same time, market investors today are also more savvy and experienced analyzing tech companies than their counterparts in the dot-com era, Birnbaum pointed out. More importantly, they demonstrate more restraint and discipline in the amount they are willing to pay for companies, he said.

The danger exists in that they forget the experience of the past and succumb to the hype, Birnbaum warned. “If they do, then we may face another bubble and its usual consequences,” he said.

The massive valuations and funding that sites such as Facebook and Twitter have garnered has lent to the hype that social networking sites, which boost huge user bases, will soon go public–though Facebook CEO Mark Zuckerberg, for one, has denied this back in 2007.

LBS finds investor favor
While Azione Capital’s Phua said he did not think tech IPOs will emerge in 2010, he acknowledged that there has been more optimism in investor sentiment nowadays. With investor money expected to flow to deals in the next two to three years, tech startups are keeping an eye out for the best opportunities, he said.

Birnbaum of iGlobe Partners added that social media businesses may be getting the most publicity among tech entities, but mobile services companies including location-based services (LBS) providers, are another area of interest, though not necessarily as “sizzling hot” as social media.

Ryan Lim, business director of Blugrapes, which specializes in location-based social media, said the firm will only consider going public when the financial, business and market conditions are suitable. Another factor, he added in an e-mail, would be when “customer demand far exceeds what we are able to provide through organic growth and internal resources”.

On the tech IPO hype, Lim noted that reports of secondary market trading of shares from the likes of Facebook and Groupon have probably sparked investor interest, since it breaks the decade-long dry spell of tech IPOs.

Investors are generally looking for something exciting and promising to invest their money in, even though the valuations of companies such as Facebook have been deemed unrealistic by some analysts and investors, he concluded.

IBM to open S’pore cloud facility

SINGAPORE–IBM has announced plans to invest US$38 million to establish a new data center here dedicated to servicing its cloud computing customers in the Asia-Pacific region.

Slated for launch next month, the facility will be Big Blue’s first in the region and will deliver its portfolio of public and private cloud services including test and development. The vendor already has four similar centers in Germany, Canada and the United States, as well as a global network of 13 cloud labs which objective is to promote cloud adoption and concept.

Andrew Sotiropoulos, IBM’s Asia-Pacific general manager of global technology services, said in a statement Monday the investment is representative of increased demand in cloud services from IBM’s clientele in the region.

Citing figures from research firm IDC, IBM said cloud services in the Asia-Pacific will grow an average 40 percent a year to reach US$4.9 billion in 2014, driven by the emergence of regional data centers providing the infrastructure needed to deliver cloud services.

Elaborating on the announcement, a Singapore-based IBM spokesperson told ZDNet Asia the vendor is seeing demand for its test-and-development public cloud service, which will be one of the first offerings to be made available at the new data center. She said this cloud service is designed for companies that do not wish to invest in hardware equipment to test and develop new products and deployments.

She added that cloud services are relevant for all vertical industries and are particularly attractive in growth markets such as the Asia-Pacific region. The new data center will “cater to anyone in Asia-Pacific who needs to wants to access infrastructure as a cloud model”, she said.

Troubled Qtrax is back and licensing music

Qtrax, the music company that once sought to create a legal file-sharing music service, has finally struck several music licensing agreements and will launch next week, the company said last week.

Details about the arrangements are scant, but apparently three of the top four labels have agreed to extend Qtrax’s former music licenses for three months to allow the company time to try and raise money. Qtrax still owes some of the big labels money and must get caught up before the three-month period ends or lose the rights to the songs, according to one source.

A company representative told ZDNet Asia’s sister site CNET that it will officially launch in 30 countries starting next week, including the United States. The music, which is available in beta at music.qtrax.com, will be free to use and ad-supported. The songs are mostly deep catalog and wrapped in digital rights management.

Ad-supported music sites have a dismal record for generating winning services. Companies such as SpiralFrog and Imeem went bust trying to make it work. Add to the list of hurdles that Qtrax faces is the company’s history for just getting out the door in digital music.

Qtrax is most famous for throwing a huge party in Europe three years ago to celebrate the launch of its service, and the company’s CEO once boasted that he had struck licensing deals with all the top labels, only to watch label execs deny that any such agreements with Qtrax existed.

Since then, Qtrax managers have generated a few headlines for promising to launch and failing to meet the self-imposed deadlines. The company’s prospects of ever getting off the ground looked nonexistent after it started bouncing checks and getting sued by several of vendors, including Oracle, for failure to pay.

Try out Qtrax, but I recommend not getting too attached. The fact that Qtrax still doesn’t have the funding to secure licensing deals for an extended period suggests money issues continue to plague the company.

APAC SMBs still not ready for disasters

Small and midsize businesses (SMBs) are still not prepared to deal with IT disasters, with only 48 percent of companies in the Asia-Pacific region that have established disaster recovery (DR) plans, according to a new survey.

Released by Symantec Monday, the survey revealed that 12 percent of Asia-Pacific SMBs did not have a DR plan or had plans to create one. Among them, 44 percent did not think computer systems were critical to the business, while 38 percent said it never occurred to them to put together a DR plan and 28 percent said disaster preparedness was not a priority.

In a phone interview with ZDNet Asia, Ronnie Ng, Symantec’s manager for systems engineering, said these companies were ignoring the risks of data loss and its impact on their business by not taking disaster preparedness seriously.

Keeping in mind that SMBs in the region suffered an average of five outages last year due to cyberattacks, power outages, upgrades and employee errors, Ng noted that only 52 percent of companies said they backed up at least 60 percent of their data.

Less than half backed up their data weekly or more frequently, only 21 percent carried out daily backups.

Of those with DR plans, half said they implemented one after suffering either an outage or data loss, and only 28 percent actually tested their plan, according to the survey.

Ngsaid: “No DR plan is ready until you have tested it and that could involve having automated tools, for example, simulation of a disaster recovery, and putting that process in place. It also means making sure that every six months to a year, you should be running some kind of tests, such as recovering lost system, ensuring that systems are sound and the team is fully ready to handle a crisis.”

Without a sound DR plan, SMBs in the region that encountered some form of downtime lost up to US$14,500 per day, with those in Singapore experiencing a slightly higher loss at US$14,700. Outages cost more serious damage, with some SMBs reportedly bleeding up to US$45,000 a day, according to the Symantec report.

Companies who had experienced outages might also have lost some customers, the survey pointed out. A check with 552 SMB customers worldwide revealed that 72 percent would switch vendors in the event of disasters, Ng said, noting that customers “are not as tolerant” as their vendors might think they are.

Some 51 percent of these customers stated that their vendors’ networks were temporarily shut down due to a disaster, which explained why “they are ready to switch vendors if the service level provided is not up to expectations”, according to Symantec.

This is the security vendor’s second SMB disaster preparedness survey which this year polled 1,288 companies worldwide. There were 900 respondents from the Asia-Pacific region which included Singapore, Malaysia, China and India.

Importance of foresight
Ng said: “Even after the first survey, we realize that SMBs are not taking [DR preparedness] seriously. This boils down to the fact that the IT teams [in SMBs] are usually small, and when they prioritize their work, it is usually the day-to-day operations that come first.”

He referred to the Orchard Road flooding incident in Singapore last year as a prime example of why it is important to be “insured” against disasters. “That was one of the situations which no one thought would ever happen. With computers under water, you’re likely to lose a lot of data and the recovery can be expensive if you choose to [initiate the recovery process] and provided it can still be done. This can put SMBs out of business as well,” he said.

Ng explained that it is critical companies recognize the importance of protecting their data. “At the very least, back up your data and important information, and make sure you put good security solutions in place to defend external threats,” he said.

Cloud computing is an option SMBs can explore to better protect their data, he recommended.

Disaster preparedness also involves getting employees educated on good IT practices, which should include not storing important data on their mobile laptops and ensuring data is duplicated on file servers to allow for a better management in the event of DR, he said.

Safe and secure access to the Internet can also help mitigate risks against potential threats, he shared.

Ng also highlighted that associations and government agencies such as Singapore’s Media Development Authority (MDA) have initiatives and seminars to raise IT awareness among SMB executives.

First female wins top S’pore IT award

SINGAPORE–A female IT professional has been conferred the IT Leader of the Year by the Singapore Computer Society (SCS) at its annual awards Friday. This is the first time a female has won the top accolade in the 15-year history of the awards.

Tan Yen Yen was recognized for her instrumental contributions in boosting the local talent pool and furthering the country’s attractiveness as a research and development (R&D) hub, the SCS said in a media briefing last week. The IT body also singled out her involvement in the establishment of Hewlett-Packard’s research facility in Singapore last year, during her tenure as vice president and managing director of HP Singapore.

Tan, who spent 18 years at HP, is currently senior vice president of applications at Oracle Corporation Asia-Pacific.

The IT veteran of 24 years said being conferred the IT Leader of the Year was a “very big honor and a pleasant surprise”. She also expressed hope that there would be more female recipients of this award in future.

Tan, who is also chairman of the Singapore Information Technology Federation (SiTF), told ZDNet Asia that throughout her career, she “never felt there was a glass ceiling”. According to the mother-of-four, it is important for women to understand the opportunities out there, which are not only to move laterally, but also upward.

The past two decades of her career, added Tan, has been an “amazing journey” and also a “humbling experience [because] only when you admit you need to learn, you broaden your thinking”.

Prior to Tan’s win in the category, there had only been three female winners in other categories. In 2009, Pearleen Chan, senior director of consulting group at IDA International, a subsidiary of Singapore’s ICT regulator the Infocomm Development Authority (IDA), was inducted into SCS’s Hall of Fame. That same year, Winne Soh, co-founder of Dream Axis won the IT Youth award. Carmee Lee, now mentor principal at MindChamps, won the Friend of IT award at the inaugural awards ceremony back in 1997.

Asked why it took so long for a female to win the IT Leader of the Year, Vincent Lim, chairman of SCS’ IT Leader Awards 2011, noted that over the past 15 years, award nominees were predominantly male. This is consistent with the demographic profile of IT professionals, where 70 percent of the IT workforce are male, he explained in an e-mail.

In addition, three to four out of 10 graduate from IT courses from polytechnics and universities are male. This current landscape in Singapore’s IT community explains why there are more male nominees and recipients, Lim said.

Another IT veteran was recognized by the SCS for having played a crucial leadership role in shaping the path of IT development in Singapore. For his contributions, Lee Kwok Cheong, CEO of the Singapore Institute of Management (SIM), became the latest member to be inducted into SCS’ Hall of Fame. Incidentally, Lee had won the IT Leader of the Year award back in 2000.

Lee moved to Singapore from his birthplace Hong Kong in 1983, after which headed the computerization program of Singapore’s civil service, culminating in the nationwide IT2000 masterplan. Previously chief executive of National Computer Systems (NCS), he made a mid-career switch in 2005 from IT to education.

“It is gratifying that the IT community still remembers a person who has left [the industry]”, Lee told ZDNet Asia at the sidelines of the media briefing. According to him, there is not a sharp distinction between his education and IT careers as his experience in the IT professional services arena had exposed him to issues such as manpower and training.

Other winners this year are 27-year-old Douglas Gan, who was awarded Young Professional of the Year, and 19-year-old Vishu Prem, who won the IT Youth accolade.

Gan boasts over 10 years of experience in the IT industry, having started PureHostings.net, one of Singapore’s pioneering Web-hosting companies, at the age of 16. He is currently is the founder and CEO of location-based service ShowNearby, which he started in March 2008. Global Yellow Pages pumped S$3.5 million (US$2.7 million) into the company last July, which Gan said is a “huge testament that this product is monetizable”.

His advice for aspiring entrepreneurs is to not be “naive” and think that innovation or creativity is enough. Instead, startups must understand the business processes behind “making money from your innovation”, as well as sustaining and growing the business.

Keeping to ‘authentic leadership’

newsmaker SINGAPORE–Because of the need to juggle work and family, women are innately good at time management, says Tan Yen Yen, senior vice president of applications at Oracle Asia-Pacific. The conferment of the IT Leader of the Year accolade by the Singapore Computer Society (SCS) on Friday for her contributions to the country’s IT sector, is testament to her success in balancing home and office roles.

Tan, who is also chair of the Singapore Infocomm Technology Federation (SiTF), graduated with a degree in Computer Science from the National University of Singapore in 1987, following which she spent three years in a “technical field” writing code at the Systems and Computer Organization in the Ministry of Defense (Mindef).

But being “a pretty outgoing person, sitting behind the desk writing codes” was not something she truly enjoyed. Hence, she made her first foray into sales at a now-defunct Australian software house called CSP. She worked there for another three years doing both sales and pre-sales consulting.

It was in Hewlett-Packard (HP), her third job, that she delved straight into sales–her favorite aspect of IT. She joined in 1993 and spent 18 years with the hardware giant, in what she described as a “roundabout” trip. Within the first five years, she became country channel manager of Singapore. The next eight saw her handling running channels and alliances for Asia-Pacific, followed by the software global business unit for HP South East Asia (SEA) and India. She later returned to the Singapore office and became managing director of HP Singapore, a post she held for five years, until her move to Oracle in July 2010.

Mother to a 14-year-old daughter and three sons aged between eight and 11, Tan said her career progression has only been possible because of the support of her family. During the chat with ZDNet Asia, she also touched on the influence of motherhood on her leadership style, and her two unwavering fundamentals as a mentor–integrity and “authentic” leadership.

Q: Twenty-three years and counting, how do you keep your passion going for the IT business?
There’s never a boring moment in the IT field. You must embrace new things, and in IT especially, things move so fast. If you embrace it, you actually enjoy the changes–the new things, new announcements, new mergers, new technologies, and new ways of doing business. Every day brings new stuff in IT, whether it’s technology development, client negotiation, team management. One of my philosophies in life is because you tell yourself that you don’t know everything, there are always new things for you to learn. To me, that’s how I can reinvent myself and also broaden my thinking, and I guess that keeps me going, keeps me motivated to stay in the industry.

I get bored easily. So I’m always looking for the next challenge, the next new thing that motivates me. That’s how I managed my team in HP. In my five years as Singapore MD (managing director), I job-rotated the people around because I find that after a while, you need to give fresh challenges for people to keep them motivated…even if it’s a lateral move, not a promotion.

Do you have a particular favorite area or aspect in the IT domain?
I actually like the sales aspect of it, that’s probably the longest part of my career in the 20-over years. Because every sales call, every sales situation, every bit that goes out there is different–that’s the exciting thing. And the adrenaline of winning a deal with your team, you can’t describe that.

Being the first-ever female to win the IT Leader of the Year award from the SCS, do you feel that recognition for women’s contributions and leadership in IT is long overdue?
Singapore is very unique case with lots of IT companies run by women, like Accenture Managing Director Teo Lay Lim; Microsoft Managing Director Jessica Tan; IBM Managing Director Patricia Yim; and even now, HP Managing Director Kelly Tan. That to me is recognition of women leadership, to be able to run an IT company. In Singapore, I don’t think it was by design that we must have women leaders in companies. I’m sure they got to where they are because they’d proven themselves in the company.

Whether the recognition is long overdue is a very interesting case. I didn’t realize until Lee Kwok Cheong (SCS’ 2011 IT Hall of Fame winner) mentioned to me that I’m the first woman to win the IT Leader of the Year award. Maybe because in the old days there were fewer women in the industry, so you’d have fewer female leaders in the IT industry too.

Also, I think it’s very much by choice for many of the women, especially after they have children. Of course the government is trying advocate productivity, making it attractive for them to come back to the workforce; and I think many women are very capable, can probably go far, whether in the IT industry or not. But it’s by choice that these women have decided to come out of the workforce, especially during the early childhood years of their kids. So in some way you miss out on that category of people, and you get less of such workforce in the industry.

Since the start of your career, have you noticed a shift in male-female gender balance in IT landscape of Singapore?
I certainly see more women in the industry today, although it depends on what roles. You may see more women in project management, while you may see more men in sales. In Oracle, actually I see more men in sales. Personally, when I started in HP, it was mostly male salespeople and only a handful of females. When I left HP, there were many more women, so there’s more balance between the genders.

In the SiTF, I also get to work with startups and entrepreneurs and we have our own awards to recognize innovation within the industry. It just surprises me each year how many creative, innovative and entrepreneurial young people there are in the industry, which is very comforting, but I seem to see less of women in that area of entrepreneurs and startups. Generally there seems to be more males among the nominees for IT Youth winners. I definitely hope to see more women coming into this space.

Did the thought of being a full-time mother ever cross your own mind?
It sort of zoomed past! Not really, not at this stage of my life. My husband knows me well enough. I’m pretty much a go-getter, very active. I think it’s important that whatever your choices are, you have to be happy doing what you’re doing. Not that I won’t be happy being a stay-home mother, but put it this way, I’m happy with how things are now, balancing both work and family. Am I strapped for time? Do I wish I had more than 24 hours? Yes, I won’t kid myself to say no. But I guess I have the best of both worlds, being with the family and at the same time enjoy doing what I’m doing.

Has being a mother of four children contributed anything to your leadership style?
That’s an interesting question. I never think about it in terms of my role as a mother and corporate worker. Definitely the part of patience is very important. In today’s generation, it’s no longer parents telling children what to do and go do it. I have a teenage daughter. So the patience part is really for them to believe that the decision is theirs, not mine. Similarly, at work the culture today is unlike in the old days, when the boss says 1, 2, 3, you do 1, 2, 3. It’s lot more a buy-in culture, so people feel they’re part of the whole decision process. That’s probably one aspect I can think of that’s similar. Certainly being a mother means I have to learn to juggle my time a lot better, so time management helps me to juggle even more, playing the different roles.

Being a woman leader, I like to think that I bring a sense of collaboration, the nurturing part, especially in the part of team management, and also a sense of empathy into the equation. I guess that’s the soft side of things that women leaders bring to the table. I think it does make a difference in terms of really pulling the team together, motivating the team and how you manage the team.

How else has your leadership style changed over the years?
To me, fundamentally there are a few things that you believe in and wouldn’t change. Whether you want to succeed in work or in life, the integrity part to me is very big and important. It sort of starts and ends there. You need to know that you have a moral compass that guides you day in day out, and people who work with you. To me, it’s as simple as doing what you say and saying what you do with a level of integrity that is visible to people so that people can trust you. I don’t think that would ever change, in whichever job I go to.

The other leadership aspect quite fundamental to me and I spend a lot of energy on is the people side of things. Because wherever you go, you may have the best products, best processes in the company, at the end of it how things happens depends on your employees, on the people. I like to use the term authentic leadership. It’s about being sincere and authentic. That has always served me well. People can see through you if you’re not authentic and if you are authentic, people can also feel that. To me, that’s the way I gain trust with the people I work with, whether they’re peers or part of my team. These are the fundamentals in terms of leadership that I’ve always stayed true to and I don’t think that has changed.

People must ask: how do you master time management given your work and mother roles?
People always wonder, “Do you sleep?” I’m very active in terms of doing sports during my personal time too. My priority is very simple. My family comes first. I enjoy my work and all that, but everything centers around my family, it’s always been. Even before I got married, my family is most important. Family sort of anchors you and makes you grounded, so you know where your focus should be.

I have to careful when I say this: I always feel that ladies are very good time managers. Maybe because working women are still expected to contribute when you’re back home, in terms of making sure the kids do their homework, that they’re being nurtured and all that. I think being a wife, a mother, a worker, it’s just in us–our nature and our ability to juggle is a lot better. To some extent, people [on the outside] may think I do a better job, but to me, the credit goes to my whole support infrastructure, not myself.

I’m very, very lucky and very, very blessed in terms of the support system that I have at home. I have a very supportive husband who’s my cheerleader and always supportive of whatever things I want to do. I have a fairly good infrastructure in the family, my in-laws stay with me, and my sister helps me out sometimes. I also have a domestic helper who’s been with the family for 11 years. So I’m very lucky to have the whole support, so that when I’m at work my mind is at peace and I know that the children are well taken care of when I’m not around or when I travel. And I try to involve them in the things I do. I do a lot of triathlon training, and all my four kids do triathlons, so I don’t feel guilty having to do one over the other. I involve them and make sure they’re part of my life, and it’s also good bonding time.

What advice would you give to women who aspire to be like you?
I’m not a deliberate person; I don’t say to myself, “Okay, by this year, I need to be the MD of the company.” I never started that way in my career. I think it’s important to take things as they come, don’t plan too much, and whenever there are opportunities out there, be the one to put up your hand and willing to try. Be open-minded. It’s the journey of getting there, not the end itself. The journey is where you should enjoy the process and embrace the new experience. Some people get very hung up, like “Eh, that’s not the role I want to do.” But I say you’ve got a long career. Even for me, it’s been 23 years, I probably have another 23 years to go, but I’m not sure if I want to work that long (laughs). I mean, I’m still young right. Even when I’m 60-something, I’m sure I’ll still be mentally alert and active.

Also, be passionate in whatever you do. I’m very energized. Whatever you do, put your energy into it. Don’t do things half-heartedly, either you’re in or you’re out. That’s always been my philosophy.

Eighteen years with HP. Why the move to Oracle?
Like I said, I’m always looking for the next new challenge. I could have stayed on, I was happy. But I guess my boss plays a big role. To me, it’s important to work with people that you enjoy working with. My current boss at Oracle, Steve Au-Yeung, was also my boss for probably the longest time in HP, when I was at the SEA and India software global business unit for six years. Steve and I have a good working relationship. When he posed this opportunity, I went, “Hey, sounds interesting, why not?”

When he told me about the role, in some way, it’s different from what I was doing, and it was a regional role. So back to my point that I’m always looking for something new, something different. The other aspect where I was really keen was also the whole area of applications. In HP, I’m probably more exposed to services, solutions but more on the hardware side. I feel that at the end of the day, applications do make a difference to how a company runs its business. To me, that’s a very important point that touches the real customer business.

You’ve been in IT since graduation. Did you ever consider other industries at all?
Actually, I wanted to be a doctor when I was young, when I had bigger dreams then! (Laughs) My mom always told me that I wrote in all my school compositions I wanted to be a doctor. But I guess my results weren’t good enough to get me there. And when I started studying biology, it wasn’t a subject I really enjoyed, along with the sight of blood. I enjoyed mathematics and science and languages, and eventually I decided to do computer science.

Another aspect I enjoy is executive coaching, life coaching. Not many people know that. I’ve thought that whether I’m working in IT or not, I want to sort of upskill myself. It could be a second career at some point. That’s one area I’m personally interested in.

Security top cloud for APAC SMBs

Security services are expected to be among the first cloud initiatives to be adopted by small and midsize businesses (SMBs) in the Asia-Pacific region, according to a new survey by AMI-Partners.

Released Thursday, the Worldwide SMB Cloud Services Study revealed that the region’s SMBs are more keen on adopting software-as-a-service (SaaS) security solutions, than counterparts in the United States, United Kingdom, Germany, Canada and Australia, which have already adopted these applications.

In addition, Asia-Pacific and Southeast Asian countries are also more likely to invest in a remotely-managed security service than the leading advanced countries, said AMI-Partners.

Yuki Uehara, senior cloud analyst at AMI-Partners, noted in a statement that while many countries in the Asia-Pacific region were relatively slower adopters of overall cloud services, “2011 will be the dawn of their increased cloud services adoption.”

According to the research firm, security and data backup are “easier to implement”, making them preferred cloud “starter items” for SMBs over other critical applications that require more complex configuration and migration.

Japan leads region in cloud uptake
Japan, recovering from an economic slowdown and a “static” technology investment state,is leading cloud services adoption in the Asia-Pacific region, AMI-Partners said. SMBs in the country will expand their use of cloud services significantly, and its adoption level in the next twelve months will “rival” that of other advanced economies, it added.

The study also found that SMBs in Southeast Asia lack the internal capability to manage complex IT environments, given that many smaller organizations are just coping with present infrastructures to support their Web site, e-commerce and mobile device use. Many SMBs, said AMI-Partners, are “novices” in the use of cloud services–most find cloud applications attractive as these allow them to “alleviate the painful overhead cost” of implementing the various IT infrastructures.

And with the current economic environment still uncertain, the research firm said the region’s SMBs are still looking to cloud services for visible cost savings optimization.

Uehara pointed out that cloud security services providers can look to “vast opportunities” in the high-growth markets in the Asia-Pacific region, but they will need to work at comprehending local requirements.

“Security vendors should understand the unique environment and preferences these countries represent [in relation] to the context of overall cloud practices,” he said.

Indian IT calls for growth-oriented budget

India’s IT-ITES (IT and IT-enabled services) industry is hoping that the tax holiday for software technology parks will remain and the government will reduce the overall tax burden in the country’s upcoming Union Budget.

The IT industry is hoping for a further extension of the tax benefits under the Software Technology Park of India (STPI) scheme when the budget is unveiled by Finance Minister Pranab Mukherjee on Feb. 28.

“India will have a competitive disadvantage if the benefits are not extended. This should be a growth-oriented budget with a next generation of reforms.” 

— Ram Panicker
Intelenet Global Services

Surjeet Singh, CFO of Patni, said: “We urge the government to extend the tax benefits for another year or two to empower the growth of small and midsize businesses (SMBs).”

Under the STPI scheme, slated to expire in March 2011, tax exemptions are provided to companies under Section 10A and 10B of the Income Tax Act. The scheme was initiated during the heydays of the dot-com boom at the turn of the millennium, and was originally set to expire in March 2009 before it was extended twice.

“All the other BPO (business process outsourcing) destinations like Philippines have tax holidays,” Ram Panicker, CFO of BPO services provider, Intelenet Global Services, said.

“India will have a competitive disadvantage if the benefits are not extended. This should be a growth-oriented budget with a next generation of reforms,” Panicker told ZDNet Asia in an e-mail.

In 2005, the Special Economic Zone (SEZ) Act came into effect, with an objective of providing an internationally competitive and hassle-free environment for exports. A SEZ is defined as “specifically demarked duty-free enclave and deemed to be foreign territory (out of customs jurisdiction), for the purpose of trade operations and duties and tariffs”. Several large IT companies built facilities in the SEZs to enjoy the tax benefits.

Profit-linked incentives and facilities, offered to units in the special zone for attracting investments, are 100 percent income tax exemption on export income for the first five years, 50 percent for next five years thereafter, and 50 percent of the ploughed-back export profit for the next five years.

SMEs to be worst hit
The STPI exemptions were not dealt with in last year’s Union Budget and industry players are hoping it would be adequately addressed this year.

If the tax benefit is not extended, IT-ITES companies in India will have to pay the full tax. “And in order to retain their existing margin, they will have to increase their rates by 3 to 7 percent,” Panicker noted.

While the tax exemption impacts all IT-ITES companies, larger IT companies will be less affected as they have built most of their new facilities in SEZs where the tax benefits will continue for a few more years.

Though the finance ministry has categorically said there will be no further extension of the tax holiday under the STPI scheme after Mar. 31, the industry is still hopeful it will remain for another year to coincide with the commencement of the new Direct Tax Code on Apr. 1, 2012.

Pradeep Chaudhry, executive vice president and CFO of Symphony Services, said: “We hope the exemptions are extended for at least one year. Otherwise, SMBs that were unable to set up new units in the SEZ will find it difficult to compete with the big players.”

However, Arup Roy, principal research analyst at Gartner, does not believe Indian IT needs more tax exemptions. “In terms of taxes and other sops, I think the Indian IT industry has developed its own momentum now and can sustain on its own.

To boost entrepreneurship, Roy suggested the government should provide exemptions for companies in certain “tiers”.

“Measures such as simplifying taxation and reducing red-tape for new projects will significantly bolster industry growth.” 

— Naresh Wadhwa
Cisco Systems

“Those falling in the lowest tier should be the ones enjoying tax and other benefits,” the analyst explained. For instance, he added, in order to let small providers participate in e-government projects in India, a certain percentage of work–for example, 25 percent–should be reserved for small providers to submit bids.

According to news reports, beyond the March 2011 deadline, the STPI scheme is likely to be retained in a modified form. The government’s Department of IT (DIT) is working with the finance ministry to formulate the STPI variant in which tax benefits would be linked to investment instead of profit.

India losing cost arbitrage?
Over the last few years, Indian call centers have been losing business to Philippines, which had a U.S. naval base and is, therefore, culturally closer to the U.S. than India is.

So, is India fast losing its cost advantages? “Yes, it’s a major concern,” said Jayan Narayanan, associate vice president and head of corporate marketing and communications at IT services provider, CSS.

“Though India has moved away from being a preferred destination solely for cost arbitrage, this factor cannot be ignored,” Narayanan added.

Panicker, though, differed: “India is moving up the value chain and able to give better value to the global customer. This helps in absorbing the inflation in the people cost.”

However, he felt that the government must ensure consistent tax measures on par with competing nations. “The government should also invest in education so that we can maintain our competitive edge in the coming years,” he added.

S. Sridharan, managing director of TAKE Solutions, concurred: “The IT industry has been continuously innovating and has focused on going beyond the cost arbitrage-based business model.”

However, Sridharan noted, the industry is faced with the challenge of keeping costs down and ensuring a steady supply of talent.

Reduce overall tax burden
Market players are also hoping the government will reduce the overall tax burden on the industry.

The industry is already paying a minimum alternate tax, MAT, comprising almost 20 percent which is affecting cashflows. “The MAT rate should be restored back to 15 percent, as was the case in financial year 2009-10,” said Karandeep Singh, India managing director of Sapient.

Naresh Wadhwa, president and country manager of Cisco Systems India and SAARC, added: “Measures such as simplifying taxation and reducing red-tape for new projects will significantly bolster industry growth.”

TAKE’s Sridharan said: “Consumers are asked to pay both value-added tax and service tax for software products. This has made products costlier and dampened demand.

“This issue has been lingering on for many years now and needs to be addressed,” he urged.

Swati Prasad is a freelance IT writer based in India.

India’s budget a mixed bag for IT

The Indian ICT industry has expressed disappointment over the government’s decision not to extend tax exemptions under the Software Technology Parks of India (STPI) scheme, but others approve its initiatives to drive technology developments in the villages.

Finance Minister Pranab Mukherjee on Monday presented the Union Budget 2011 in Parliament which did not have specific proposals for the IT sector. Instead, emphasis was placed largely on bridging India’s digital divide through the use of IT and technology.

This raised mixed responses from the IT industry.

“Budget 2011 has been very lukewarm toward the IT sector with no major alterations directed toward it,” Sunil Dutt, vice president and general manager of personal systems group, Hewlett-Packard India, said in a statement.

He noted that while initiatives, outlined in the budget, to increase the penetration of rural broadband connectivity announced are positive, their full benefits can be reaped only if personal computing devices are made affordable to the masses.

Manish Dugar, CFO of Wipro Technologies, concurred: “The minister has spoken of leveraging technology for e-government and tax administration, but the budget has no specific proposals for the IT sector.”

IT companies had batted for reduced tax rates, specifically a minimum alternate tax (MAT) and an extension on the STPI tax holiday. Both did not materialize and this has disheartened many in the industry.

Susir Kumar, CEO of Intelenet Global Services, said: “I am disappointed that the tax holiday is not extended on STPI units”. The STPI scheme, which expires in March 2011, provides tax exemptions to IT-ITES (IT and IT-enabled services) companies under Section 10A and 10B of the Income Tax Act.

Increase in tax burden
The IT-ITES industry had expected a reduction in MAT from 18 percent to 15 percent, but this was instead increased to 18.5 per cent of book profits.

Dugar said: “Increase in the rate of MAT, which was already very high, is going to add to our overall tax burden.”

Patni Computer Systems CEO Jeya Kumar said: “We believe the inclusion of special economic zones under MAT will reduce the productivity of companies, especially in the small and medium sectors which form a major chunk of the IT industry.”

The Indian government, though, has reduced tax on foreign dividends to 15 percent–a move that is likely to increase fund repatriation to parent companies in India. Ashank Desai, co-founder of IT services vendor Mastek, applauded this measure.

“We also welcome the reduction in corporate surcharge by 2.5 percent and believe it will have a positive impact on the profitability of most companies,” Desai added.

The budget also outlined measures to strengthen India’s social and financial inclusion agenda, which includes providing broadband connectivity and increasing the reach of banking facilities in villages.

“The growing role of technology outlined in improving governance will fasten the pace of opportunities for players like us,” said Rajesh Janey, NetApp’s president of India and SAARC.

The finance minister added that the Technology Advisory Group for Unique Projects (TAGUP) will look into technology aspects of five large government projects, including the Tax Information Network, National Pension Scheme and National Treasury Management Agency.

The Unique Identification of Authority of India (UIDAI), which is responsible for providing every Indian with a unique identification number, or Aadhaar, will begin enrolment of some 1 million individuals a day start April 2011.

“The dynamism we see due to scaled up flow of resources, including the intended generation of 1 million Aadhaar numbers, to rural India will prove to be significant,” Janey said.

The government also unveiled plans to provide broadband connection, as a part of the national broadband strategy, to all 325,000 rural panchayats–or local governments of Indian villages–by 2015.

Desai said: “By enabling rural India to harness broadband Internet, the minister has also provided a fillip toward the cause of penetrating Internet to the grassroots of the country.”

Naresh Wadhwa, president and country manager of Cisco Systems India and SAARC, said: “The budget this year provides a number of measures to promote inclusive growth which, in my opinion, is crucial to sustain India’s development ambitions.”

The budget also includes several initiatives to take banking to the masses, including setting up banks in villages with a population of more than 2,000 people, establishing a bill to allow the Reserve Bank of India to grant more banking licenses, as well as providing additional support to the National Bank for Agriculture and Rural Development.

According to Kamlesh Bhatia, research director at Gartner, the plan to build the National Knowledge Network by connecting 1,500 institutions of higher learning and research through fiber backbone, by March 2012, is a step in the right direction. “Countries like Singapore have benefitted immensely from similar initiatives,” Bhatia said.

He added that the budget is largely aimed at continuing the growth momentum from 2010.

Swati Prasad is a freelance IT writer based in India.

Banks shouldn’t act ‘cool’ with Gen Y consumers

SINGAPORE–Generation Y users prefer their bank to fulfill its core functions rather than be “friends” on social media platforms such as Facebook, according to a new survey, which highlights mobile phones as digital natives’ key access points for banking services.

Gen Y consumers want their financial services provider to be reliable and trustworthy, and “do not want their bank as a Facebook friend or try to be cool”, said Graham Brown, cofounder and partner of research firm, Mobile Youth.

Youths also expect banks to be accessible and offer guidance for them to make decisions, added Brown, who revealed these findings from a global survey conducted by Mobile Youth and software vendor Oracle, during a Webcast last week.

“All I want to do is pay in money and draw it out. At the end, the bank is a bank,” he said, citing a quote from a respondent.

Hence, he noted that banks are mistaken if they think they can be relevant to Gen Y customers by “being cool” with them at their level. He compared this to how parents befriend their kids on social networking sites such as Facebook.

Relationships youths have with their banks are similar to that with their parents, Brown said, adding that this parent-child relationship provides insight into what banks should not do with their young customers through social media.

“It doesn’t mean that the parent is irrelevant in their lives because they don’t talk or dress like them,” he said. “[Gen Y users] want the bank to be there in the background. On that basis, we have to be careful that banks don’t try to be relevant by being cool, but be relevant with the right approach.”

Bianca Koh, a 23-year-old sales executive based here, concurred with the survey findings. In a text message interview with ZDNet Asia, she said: “Banks should definitely not try to act cool because ‘seriousness’ actually works for them and one is able to associate trust with that.”

Koh added: “If banks go all cool, it brings down the image that they can be trusted with your money.”

Mobile access to be “new norm”
According to Brown, youth is a key market for banks. Over 2.6 billion people in the world today are aged below 30, he said.

Ultimately, what Gen Y consumers expect of their banks will redefine the “new normal” on how banks operate their services and handle customer relationships, he said.

“Young people have a pattern of discovering new methods, after which older generations later catch on and outnumber them,” he added, and noted that one key aspect of the “new normal” was increased accessibility through mobile devices.

“For youths, it is normal to access the bank through the mobile phone“, Brown revealed. This is in contrast to older generations, for whom the phone is seen as an inferior alternative to retail banking, he added.

Young consumers do not expect banks to be “exciting”, he noted. They want basic functions to be done uncommonly well, he said, pointing to the ability to check account balances anytime on-the-go, or receiving text notifications whenever their account runs out of money.

“The small things, when done uncommonly well, can have a big impact”, Brown summed up.

The mobile is also “the quicker win [and the] easier way” for banks to build a two-way dialogue with young people, compared to traditional advertising or forms of customer service such as call centers, he said. The latter channels of communication are not as effective with this particular generation as compared to their predecessors, he added.

Brown noted that youths gravitate toward other methods of accessing their bank such as online banking, and want a richer environment when they do so via their mobile. Rather than organizing offline advertising campaigns or hiring spokespersons, banks can tap mobile platforms to better market their services to Gen Y consumers, he added.

26-year-old teacher, Diana Tay, said in a text message interview that she dislikes the “inconvenience of going to the bank to queue and wait”, preferring instead to access banking services online via her laptop. Asked if she would use the mobile phone, Tay told ZDNet Asia: “Only if it was urgent and necessary because of security concerns“.

The Mobile Youth survey’s findings corroborate with an earlier report by Firefly Millward Brown which highlighted that companies are still struggling to use social media effectively to connect with customers.

In addition, the report stated that consumers want to be engaged in dialogues and two-way conversations with companies on social networks, and do not want companies to use social networking sites as a marketplace to hawk goods and services.

Indian IT calls for growth-oriented budget

India’s IT-ITES (IT and IT-enabled services) industry is hoping that the tax holiday for software technology parks will remain and the government will reduce the overall tax burden in the country’s upcoming Union Budget.

The IT industry is hoping for a further extension of the tax benefits under the Software Technology Park of India (STPI) scheme when the budget is unveiled by Finance Minister Pranab Mukherjee on Feb. 28.

“India will have a competitive disadvantage if the benefits are not extended. This should be a growth-oriented budget with a next generation of reforms.” 

— Ram Panicker
Intelenet Global Services

Surjeet Singh, CFO of Patni, said: “We urge the government to extend the tax benefits for another year or two to empower the growth of small and midsize businesses (SMBs).”

Under the STPI scheme, slated to expire in March 2011, tax exemptions are provided to companies under Section 10A and 10B of the Income Tax Act. The scheme was initiated during the heydays of the dot-com boom at the turn of the millennium, and was originally set to expire in March 2009 before it was extended twice.

“All the other BPO (business process outsourcing) destinations like Philippines have tax holidays,” Ram Panicker, CFO of BPO services provider, Intelenet Global Services, said.

“India will have a competitive disadvantage if the benefits are not extended. This should be a growth-oriented budget with a next generation of reforms,” Panicker told ZDNet Asia in an e-mail.

In 2005, the Special Economic Zone (SEZ) Act came into effect, with an objective of providing an internationally competitive and hassle-free environment for exports. A SEZ is defined as “specifically demarked duty-free enclave and deemed to be foreign territory (out of customs jurisdiction), for the purpose of trade operations and duties and tariffs”. Several large IT companies built facilities in the SEZs to enjoy the tax benefits.

Profit-linked incentives and facilities, offered to units in the special zone for attracting investments, are 100 percent income tax exemption on export income for the first five years, 50 percent for next five years thereafter, and 50 percent of the ploughed-back export profit for the next five years.

SMEs to be worst hit
The STPI exemptions were not dealt with in last year’s Union Budget and industry players are hoping it would be adequately addressed this year.

If the tax benefit is not extended, IT-ITES companies in India will have to pay the full tax. “And in order to retain their existing margin, they will have to increase their rates by 3 to 7 percent,” Panicker noted.

While the tax exemption impacts all IT-ITES companies, larger IT companies will be less affected as they have built most of their new facilities in SEZs where the tax benefits will continue for a few more years.

Though the finance ministry has categorically said there will be no further extension of the tax holiday under the STPI scheme after Mar. 31, the industry is still hopeful it will remain for another year to coincide with the commencement of the new Direct Tax Code on Apr. 1, 2012.

Pradeep Chaudhry, executive vice president and CFO of Symphony Services, said: “We hope the exemptions are extended for at least one year. Otherwise, SMBs that were unable to set up new units in the SEZ will find it difficult to compete with the big players.”

However, Arup Roy, principal research analyst at Gartner, does not believe Indian IT needs more tax exemptions. “In terms of taxes and other sops, I think the Indian IT industry has developed its own momentum now and can sustain on its own.

To boost entrepreneurship, Roy suggested the government should provide exemptions for companies in certain “tiers”.

“Measures such as simplifying taxation and reducing red-tape for new projects will significantly bolster industry growth.” 

— Naresh Wadhwa
Cisco Systems

“Those falling in the lowest tier should be the ones enjoying tax and other benefits,” the analyst explained. For instance, he added, in order to let small providers participate in e-government projects in India, a certain percentage of work–for example, 25 percent–should be reserved for small providers to submit bids.

According to news reports, beyond the March 2011 deadline, the STPI scheme is likely to be retained in a modified form. The government’s Department of IT (DIT) is working with the finance ministry to formulate the STPI variant in which tax benefits would be linked to investment instead of profit.

India losing cost arbitrage?
Over the last few years, Indian call centers have been losing business to Philippines, which had a U.S. naval base and is, therefore, culturally closer to the U.S. than India is.

So, is India fast losing its cost advantages? “Yes, it’s a major concern,” said Jayan Narayanan, associate vice president and head of corporate marketing and communications at IT services provider, CSS.

“Though India has moved away from being a preferred destination solely for cost arbitrage, this factor cannot be ignored,” Narayanan added.

Panicker, though, differed: “India is moving up the value chain and able to give better value to the global customer. This helps in absorbing the inflation in the people cost.”

However, he felt that the government must ensure consistent tax measures on par with competing nations. “The government should also invest in education so that we can maintain our competitive edge in the coming years,” he added.

S. Sridharan, managing director of TAKE Solutions, concurred: “The IT industry has been continuously innovating and has focused on going beyond the cost arbitrage-based business model.”

However, Sridharan noted, the industry is faced with the challenge of keeping costs down and ensuring a steady supply of talent.

Reduce overall tax burden
Market players are also hoping the government will reduce the overall tax burden on the industry.

The industry is already paying a minimum alternate tax, MAT, comprising almost 20 percent which is affecting cashflows. “The MAT rate should be restored back to 15 percent, as was the case in financial year 2009-10,” said Karandeep Singh, India managing director of Sapient.

Naresh Wadhwa, president and country manager of Cisco Systems India and SAARC, added: “Measures such as simplifying taxation and reducing red-tape for new projects will significantly bolster industry growth.”

TAKE’s Sridharan said: “Consumers are asked to pay both value-added tax and service tax for software products. This has made products costlier and dampened demand.

“This issue has been lingering on for many years now and needs to be addressed,” he urged.

Swati Prasad is a freelance IT writer based in India.

Apple CEO succession disclosure nixed by shareholders

CUPERTINO, Calif.–Apple shareholders voted today against a proposal that would have required the company to disclose its succession plan for senior management.

The proposal was one of two by shareholders aimed at adding transparency and a new voting standard to what is considered one of the most secretive technology companies. In its proxy materials ahead of the meeting, Apple’s board had urged shareholders to vote against both proposals.

As expected, Jobs was not present during the meeting. In his place was Chief Operating Officer Tim Cook, who has filled in for Jobs since January when Jobs, a pancreatic cancer survivor who has received a liver transplant, announced his latest medical leave.

A group of shareholders had asked the company to reveal its plans for replacing Jobs, a request Apple had rallied against, saying such a revelation would give competitors an “unfair advantage” by publicizing the company’s confidential objectives and plans. Nonetheless, earlier in the month Institutional Shareholder Services endorsed the proposal, which was originally put forward by the Central Laborers’ Pension Fund, a holder of about 11,500 shares of Apple stock.

The second proposal, which concerned majority voting of board members, passed, giving share owners the power to cast Nay votes against unopposed directors. Apple said its objection to the measure was based on differences in majority voting requirements by state, which, the company said, could add a “layer of complexity” to implementation.

During the question and answer session that followed, Cook was joined on stage by Phil Schiller, senior vice president of worldwide product marketing, and Peter Oppenheimer, senior vice president and CFO. Cook talked up Apple’s services over the past year, including its opening of 44 new retail stores and shipping of 40 million iPhones, doubling unit sales from the previous year. Cook also said the company had made great advances in China, tripling revenue there since last year.

Cook paid special attention to iOS, including the iPhone and iPad, saying that the OS continued to be “years ahead” of competitors’ platforms. Cook also brought up next week’s press event, saying that the invitation had provided some clues about what Apple planned to announce. Even so, audience members peppered the company about its strategic plans for iOS, including things like whether it would ever allow plug-ins, or how Apple could avoid the sort of hardware-specific software distribution limitations it experienced during the Mac versus PC era in the early ’90s, which went Microsoft’s way.

Schiller responded by saying that that had been “a different time”, and that the iPhone was a “post-PC” product. Apple’s senior vice president of iOS Software, Scott Forstall, jumped in on the third-party plug-ins question, saying that plug-ins had been kept off the platform for stability and security, citing some of the difficulties in moving from Mac OS 7 to 8 as being a leading factor in that decision.

One audience member also brought up the conditions for workers at overseas factories where Apple products were produced, as well as asking if Cook, Schiller, or Oppenheimer had seen the play “The Agony and Ecstasy of Steve Jobs”, playing about an hour away from Apple’s campus, at the Berkeley Repertory Theatre. All three said they hadn’t, with Schiller seeming visibly frustrated by the question.

Cook followed by offering details about Apple’s considerable efforts to go through its supply chain to find problems that could be fixed, as well as noting that the company had helped reimburse close to US$300 million in fees paid by workers. “I am really proud of the changes we’ve forced,” Cook said.

Also of special interest was a question about whether Apple would ever offer a way for consumers to ditch their television sets to watch streaming TV shows on their computers instead. Schiller answered by saying that Apple was always adding “new types” of media. Even so, he said, counting out the TV at this point for live events would be a rash decision.

And speaking of entertainment devices, Cook fielded a question about whether Apple had plans to get more serious about gaming, particularly with a dedicated device, by saying that the company was already in the gaming business with the iPod Touch, and had great success with a large library of games on the App Store. “There’s a segment who are using it as a primary gaming device,” he said. “We think that’s a good place to be, where we are right now.”

One audience member also questioned what Apple was up to with its license of Liquidmetal, a query Cook politely shot down, saying the company does not discuss what it does with its investments short of saying that such investments were often for personnel, infrastructure and intellectual property.

Salaries, contract jobs in S’pore on upward trend

SINGAPORE–Salaries and contract roles are on the uptrend in the country, according to the latest annual employment report from Robert Walters.

Released Tuesday, the Robert Walters Salary Survey 2011 found that employers expect to dish out higher remuneration this year, particularly for experienced hires.

Andrea Ross, Robert Walters’ managing director for Singapore and Malaysia, said in a media briefing that salary increases in 2011 will range between 10 and 15 percent for candidates moving into new employment. Companies are also willing to pay a premium for highly sought-after candidates with niche skill sets, she added.

Contract assignments, noted Ross, will also see a rise because candidates are looking to “gain varied experience, increased exposure and the opportunity to work for renowned companies”.

The study also revealed that Singapore companies last year continued to fight a “war of talent” to try and retain top employees amidst an abundance of job opportunities.

Despite some professionals flocking to overseas markets such as China and Hong Kong, the talent pool in Singapore remained largely intact due to an influx of professionals from Asia, Australia and Europe as well as Singapore citizens returning home to seek employment.

Singapore, said Ross, is expected to remain the Asian capital for global banks and their control functions. This, she noted, was in line with the government’s efforts, as outlined in this year’s Singapore Budget.

In his address last Friday, Finance Minister Tharman Shanmugaratnam touched on measures to cement the country’s position as a “global Asian hub”.

The aviation and aerospace sector was singled out in the Robert Walters report as having high job growth estimates. The recruitment agency said the increase was due to the launch of the Seletar Aerospace Park.

IT hiring healthy
Annie Lim, manager of IT commerce division at Robert Walters, told ZDNet Asia on the sidelines of the event that hiring will also grow steadily for the IT sector.

“The economy is picking up and companies are more willing to invest in technology [because] they no longer see tech as a backend support, but as a tool or means to help their businesses,” she said.

As a result, more IT projects are being implemented, spelling good news for providers of hardware, applications and services, Lim noted. This will in turn lead to a stronger demand for tech talent, particularly in the mid to senior level positions, she pointed out.

Elaborating on the IT projects, Lim said the technology rollouts are at both the front- and backend. Some companies are refreshing their technology platforms, while others are moving to improve the productivity and efficiency of systems such as CRM (customer resource management) and sales and marketing, she explained.

The 2011 survey findings also predicted a rise in demand for contract IT professionals in Singapore, especially for new projects or those that require niche or new skills not yet available in the country.

Benchmarking salary on the go
In addition to releasing its new study, Robert Walters also launched its first mobile app that allows professionals and recruiters alike to check remuneration rates on the go.

The free salary checker app for the Apple iPhone and iPad provides users with instant access to pay rates for all professionals in sectors that the recruitment agency specializes in, including banking, financial services, accounting, legal, supply chain, engineering, and IT.

Ross said the main reason for developing the application was to provide “an ease of reference” for job seekers. The app is updated yearly, following the annual cycle of the salary survey findings.

According to her, the app was conceived in the London office and took six to eight months to develop. Asked if the app will be available on other mobile platforms such as Google’s Android, Ross replied “slowly but surely; we want to master this first.”

Stanford tweaks recipe for quantum dot solar cells

In the search for cheap and efficient solar cells, Stanford University researchers are mixing in new ingredients.

Chemical engineering professor Stacey Bent last week presented the results of a paper at the annual meeting of the American Association for the Advancement of Science that showed how a new combination of materials boosted the performance of solar cells made with quantum dots.

The research is in very early stages, but it could provide clues on how to make solar cells with relatively inexpensive materials that have higher efficiency than is currently possible.

Many researchers are trying to use materials with quantum dots as a replacement for traditional semiconductors, such as silicon, in a solar cell. Quantum dots are tiny crystals only a few nanometers in size and can be far cheaper to produce than a silicon wafer or thin-film solar cell. Quantum-dot-sensitized solar cells can also be tuned for different wavelengths of light.

But the efficiency of quantum-dot-sensitized solar cells is very low, making them impractical for commercial use. Bent and her research team added an organic molecule to a solar cell using titanium oxide semiconductor and cadmium sulfide quantum dots in an effort to improve the conversion of light to electricity

Although the efficiency is still very low, researchers found that inserting the additional material improved the efficiency threefold. Surprisingly, the size of the organic molecule mattered, but not the type of material, according to Stanford.

When sunlight hits a solar cell, an electron gets excited and “jumps” to another layer of material and carries an electric charge. Bent’s theory is that the added layer to quantum-dot-sensitized solar cells helps keep that free electron separated, rather than recombining and losing its energy.

More Asian firms eye R&D outsourcing

Businesses operating in Asia are becoming more open to outsourcing core capabilities such as research and development (R&D) in a bid to derive greater operational efficiencies. But, industry watchers warn that these companies should take care when doing so.

The Economist Corporate Network (ECN) revealed last month that product development and product design were the least likely to be outsourced or considered for business process outsourcing (BPO) among companies with Asian operations. The study was based on a survey of over 130 companies in various verticals, of which 2.4 percent were from the IT sector.

However, the ECN report noted that the number of enterprises evaluating the potential of outsourcing product development and design, exceeded or was comparable with those that indicated likewise for human resource administration or finance and accounting. Part of The Economist Group, the ECN is a membership-based service that provides analysis on economic and business trends.

Ross O’Brien, director of the ECN in Hong Kong and author of the report, revealed that the company’s tech industry clients were indeed stepping up engagement with third-party providers for R&D processes.

ECN clients, typically large multinationals, “deploy in-region R&D to help them create a virtuous cycle”, he told ZDNet Asia in an e-mail interview.

“[A] locally-developed product, which responds to application needs, form factors and price-points of Asian markets, is increasingly needed as tech companies depend on sales in Asia to shore up their global growth objectives,” explained O’Brien.

Jens Butler, Ovum’s principal analyst for IT services in the Asia-Pacific region, concurred. He noted in an e-mail that there is “certainly an increase in BPO interest” among tech organizations of core capabilities such as R&D.

However, Butler added that companies tend to be selective about the R&D aspects to outsource, where the focus is usually on functions such as testing rather than the actual design and architecting of products and services.

R&D outsourcing not for all
Rolf Jester, Gartner’s Distinguished Analyst and Asia-Pacific vice president for IT services, noted in a phone interview that there is a “decent amount of external R&D” being carried out in the industry today.

According to Jester, it is common for major software vendors to have outsourcing partners involved in product engineering. Mobile manufacturers also look to companies in China and Vietnam, for example, to develop embedded software, he said.

Sydney-based Jester added that one factor that could encourage businesses to outsource R&D is that a product has reached “commodity-stage” or is a common product with a large pool of providers.

In contrast, companies that deal with an “early-stage technology”, such as a security company with leading-edge development, would want to keep a proprietary hold over its R&D-related processes, he noted. This category of businesses may still outsource some aspects, particularly if they deem outsourcing as the best option to obtain a specific expertise, the analyst said.

Ultimately, any organization that is considering R&D-related BPO needs to discern whether that function is a competitive differentiator, said Jester.

“Each company competes on different characteristics. R&D and the ability to truly design innovative things may or may not be one of those characteristics, and each company needs to make that decision,” he explained.

For instance, he noted that Dell during its early days competed on the basis of having a supply chain that was heavily customized and ensuring that products were brought to market and delivered to the end-customer uniquely and quickly.

Butler added that while there may be proper structures in place for companies to govern the outsourcing of core capabilities, there may be reasons holding them back.

“As greater control associated with advanced architectures and more rigor are built into development functions, there will be ‘stages’ that will fit into an outsourcing function reasonably straightforwardly,” the Ovum analyst said. “However, a lot also depends on the organizational culture, risk profile and strategic direction. More often than not, it requires a specific incident to drive organizations down this path rather than a gradual shift.”

Singapore-based Data Security Systems Solutions (DSSS) is one organization that currently does not outsource any of its R&D work, and has no intentions of doing so.

In an e-mail, CEO Tan Teik Guan told ZDNet Asia that the “quality of the product is key to the success” of software companies such as DSSS.

“We choose not to outsource our product development and instead hire all our developers within the Singapore office to ensure security remains the highest emphasis during the product development cycle, and that the necessary security procedures and mechanisms remain in place while building the product,” Tan said.

He added that another reason DSSS retains development work in-house is to play its part as a “responsible corporate citizen” by exposing the current and future generation of engineers in Singapore to “high-tech entrepreneurship”.

Outsourcing core functions necessary for competitiveness
The ECN’s O’Brien, however, cautioned that companies may increasingly have no choice but to look to a third-party, including BPO service providers, for product development.

“Whole-scale outsourcing of all core development requirements to a single partner is rarely considered a good thing. But, with cycle time and cost expectations being as intense as they are in the region, IT firms can hardly afford not to leverage partners increasingly higher up their own ‘value stacks’ to reduce cycle time,” he pointed out.

“A portfolio management approach is how I am seeing firms mitigate this challenge,” he said. He related that one ECN member, which plays in the mobile applications space, distributes its code development among several geographically-dispersed partners, ensuring that no critical mass of IP (intellectual property) is in a single service provider’s hands.

According to O’Brien, in five years’ time, the majority of organizations will have no choice but to seek efficiencies from R&D outsourcing, especially since they are increasingly unable to squeeze cost efficiencies out of low-value production coupled with higher wages in Asia.

The option, he observed, is not one to dread.

“We tend to think of R&D as being only rarified moments of white lab-coated ‘Eureka!’ innovation, while in reality much of it is debugging, simulating and other labor-intensive processes materially indistinguishable from good old-fashioned manual labor.

“I believe this failure to recognize a lot of R&D for what it truly is in the IT value chain, is causing decision makers to make bad calls with regard to the extent they have to outsource, to stay competitive,” O’Brien said.

Build bargaining chip to resolve e-publishing roadblock

Publishers should go digital to reverse waning print revenues and leverage the tablet insurgence, even if they face a battle with app platform owners for control over the potentially lucrative subscription model, market observers say, adding that this should spur the print industry to improve the quality of their digital content and bargaining power.

Reuben Foong, research analyst at Frost & Sullivan, said digitized content for tablets presents several newspaper and magazine publishers a “fighting chance for the third estate”.

It would help them regain lost subscriptions suffered when Internet penetration rate reached a level that allowed the Web to take over as the dominant news source, Foong added.

This segment could prove especially viable with the increasing sales of tablets which, according to analyst group In-Stat, will reach 50 million by 2014.

Market players are already looking to tap this growth. News Corp, for instance, last month launched The Daily, a digital publication designed for tablets. Google is also pushing for its own digital news kiosk, allowing publishers to feature their content as apps for Android-powered devices, and Yahoo this week unveiled its upcoming “Livestand” mobile app in which content from Yahoo sites and external publishers will be optimized for browsing on tablet devices.

Lau Geok Theng, associate professor of the marketing department at NUS Business School, said offering subscriptions for digital issues is “definitely useful” for publishers as it ties their customers over a period of time, and helps develop customer loyalty since many readers do renew their subscriptions. In that aspect, subscriptions also help publishers reduce customer acquisition costs, he told ZDNet Asia in an e-mail interview.

Getting past platform owners
However, there have been roadblocks along the way. For example, sales of digital publications for the Apple iPad were typically limited to single issues, according to a New York Times report. The Wall Street Journal also reported that Apple took a 30 percent cut from payments for newspaper and magazine apps sold through its appstore.

Apple, though, took steps on Tuesday to address these issues with the launch of a subscription service for the App Store. Publishers will now be able to set the price and length of subscription. Payment will be processed by Apple within the appstore and the company will collect 30 percent of the revenue.

CEO Steve Jobs said in a statement: “Our philosophy is simple. When Apple brings a new subscriber to the app, Apple earns a 30 percent share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.

“All we require is that if a publisher is making a subscription offer outside of the app, the same, or better, offer be made inside the app so that customers can easily subscribe with one-click right in the app,” Jobs said.

An article by Bloomberg had reported that European publications were unhappy about Apple’s plan to keep subscription billing for the digital issues within the iTunes stores, which meant Apple would have access to subscriber data.

On its part, Apple said its users may be asked for permission to share contact information with publishers–valuable data that could facilitate targeted marketing and advertising, as reported by the LA Times.

Ownership of the customer relationship is important to publishers, said Ovum analyst Tim Renowden, making the app platform owner’s control of content billing, payments, distribution and share of the revenue a thorny issue.

Foong noted in his e-mail that limitations set by Apple may not necessarily be adopted on other tablets. The iPad currently has a stronghold on the market, allowing Apple to dictate the terms of business, he said.

Increase bargaining power
The tablet and e-reader market segments are still in their infancy, as is the supporting ecosystem, so there is “much to look forward to”, Foong said. He added that it could be several years before players catering to the needs and acting as intermediaries join the ecosystem.

According to Lau, the subscription model–or lack thereof–boils down to the bargaining power of the content distributors.

He suggested publishers could work together or partner other companies such as Microsoft or Google to develop alternative platforms to compete with Apple to weaken its bargaining power. This could pave the way for more flexible approaches to the distribution of digitized publications through apps, he said.

Subscription is a powerful tool, Lau affirmed, and there is a need for more competition and alternative platforms to facilitate the distribution of digital publications.

He urged publishers to be more proactive and help develop such alternatives to increase their bargaining power.

Go digital or bust
Ultimately, roadblocks should not deter publishers from making the move to digital platforms.

“Publishers don’t have the luxury of ignoring digital,” said Ovum’s Renowden.

Print circulations around the world have been steadily declining for several years, partly due to the availability of free content on the Web, he said, adding that publishers “really have to go digital or go bust”.

But, they will need to find a delicate balance between being left behind by the transition to digital publishing and cannibalizing existing print revenues, he cautioned. The most appropriate business model varies “significantly” given the type of content and publisher, he added. For instance, boutique literature publishers have different business needs from a tabloid or a consumer electronics magazine, he said.

Renowden noted that most digital editions currently still tend to ape the print edition in layout and design, which tends to look clunky on a tablet screen.

The onus is on publishers to produce digital edition content that plays to the advantages of digital technology to improve the reading experience and demonstrate to readers the value of buying a digital edition, he said.

Doing so will also help justify the price of the digital edition, he added, noting that while money is spent on creating the content, most consumers perceive digital editions to be cheaper than their print counterparts since printing and distributions overheads are removed.

Real-estate firm eyes agility, lower cost with Google Apps

SINGAPORE–Local real-estate agency HSR International Realtors is “going Google” to achieve better cost savings and business agility, and deliver relevant information in a timely fashion to its mobile sales staff.

HSR CEO Peter Liew said that its existing Linux-based Hmail e-mail system was installed based on client-server arrangements, which makes rapid deployment and maintenance of the platform costly and cumbersome for the company’s growth. Hmail, for instance, limits the number of employees who can access the server for their e-mail accounts to ensure the performance of the system is not compromised, he noted.

The company, he added, spent S$300,000 (US$234,000) just to buy servers and other equipment during the initial set-up and would spend the same amount annually for maintaining and upgrading the e-mail platform’s existing functionalities. Liew was speaking to ZDNet Asia on the sidelines of a media briefing Wednesday to announce HSR’s migration to Google Apps.

Comparatively, the US$50 per seat pricing for Google’s e-mail and productivity suite for its 2,700 sales staff would offer cost savings of “some half a million dollars annually”, Liew said. The contract for these services would last for a year and will be reviewed and renewed accordingly, he added.

The company also signed up for Google’s Postini data storage service to store its agents’ correspondences with clients for three years in accordance with recent regulatory changes imposed by the Council of Estate Agencies, the CEO said.

“Cost savings aside, our deployment of Google Apps will allow us to utilize the latest apps in the marketplace and scale out to other regional markets rapidly should we choose to expand our business,” said Liew.

According to him, most of the HSR sales team were already familiar with Google’s Web-based Gmail client and have personal accounts. This was a key consideration for the management team when it decided to migrate to Google’s platform, he revealed.

Asked how much support Google is providing during the initial phase of deployment and beyond, the CEO said that the search giant has been “very supportive”. Besides providing training for its internal IT team, it had also stationed Google staff on-premise to aid with the transition, which is projected to be completed by Feb. 21, he noted.

That said, he pointed out that “expectations must be managed”. HSR, for one, is not expecting Google, or its authorized reseller PointStar which assisted with HSR’s migration, to support future app deployments that are internally developed or purchased off Google’s App Marketplace, he stated.

Google-Microsoft rivalry intensifies
For two U.S. companies however, lack of product support from Google had been a bugbear, according to a Valentine’s Day-themed blog post by Tom Rizzo, senior director of Microsoft Online Services. He cited insurance company Bradshaw & Weil as one disgruntled Google Apps user that had since reverted to Microsoft’s services.

Sharing its experience, Bradshaw & Weil said in the post: “I wanted to switch to cloud-based services, to help me back up my data, recover from any failures, and reduce my need for on-site software, hardware and management. “I also wanted to use push technology and over-the-air synchronization between Microsoft Office Outlook and wireless devices.

“You said you’d be there for me but you let me down.”

Recruiting firm BridgeView IT was the other disgruntled customer, according to Rizzo’s post. It stated: “I admit I was attracted to Google Docs online document sharing and Google Talk instant messaging. Your price really caught my eye too.”

“However, in the short time we’ve been together, I realized I needed more support,” BridgeView continued. “Now that I’m with Microsoft, I can get a live person on the phone in my time of need. It really is true, communication is so important to a good relationship.”

In a separate blog post, an existing Google Apps customer, Appirio, came out in defense of the product. Responding to an interview that Microsoft’s Rizzo did with technology news site ComputerWorld last November, in which he said Google scans and keeps user data since it is “trying to sell ads”, the cloud vendor refuted his observation.

Appirio said in its blog: “Google’s advertising-supported e-mail service…is different from their enterprise business. Companies that have ‘gone Google’ say that Google Apps is more reliable and more secure than the on-premise systems that they’re moving from.”

Google’s rate of innovation with its Apps portfolio, Appirio added, proves it is investing in and serious about the enterprise.

The verbal mudslinging between both companies is intensifying as Google encroaches into Redmond’s two main cash cow products–Windows OS and Office–with Google Apps as well as its Android and upcoming Chrome OSes.

Analysts ZDNet Asia spoke to earlier this month observed that Microsoft is doing well to fend off business rivals.

Build bargaining chip to resolve e-publishing roadblock

Publishers should go digital to reverse waning print revenues and leverage the tablet insurgence, even if they face a battle with app platform owners for control over the potentially lucrative subscription model, market observers say, adding that this should spur the print industry to improve the quality of their digital content and bargaining power.

Reuben Foong, research analyst at Frost & Sullivan, said digitized content for tablets presents several newspaper and magazine publishers a “fighting chance for the third estate”.

It would help them regain lost subscriptions suffered when Internet penetration rate reached a level that allowed the Web to take over as the dominant news source, Foong added.

This segment could prove especially viable with the increasing sales of tablets which, according to analyst group In-Stat, will reach 50 million by 2014.

Market players are already looking to tap this growth. News Corp, for instance, last month launched The Daily, a digital publication designed for tablets. Google is also pushing for its own digital news kiosk, allowing publishers to feature their content as apps for Android-powered devices, and Yahoo this week unveiled its upcoming “Livestand” mobile app in which content from Yahoo sites and external publishers will be optimized for browsing on tablet devices.

Lau Geok Theng, associate professor of the marketing department at NUS Business School, said offering subscriptions for digital issues is “definitely useful” for publishers as it ties their customers over a period of time, and helps develop customer loyalty since many readers do renew their subscriptions. In that aspect, subscriptions also help publishers reduce customer acquisition costs, he told ZDNet Asia in an e-mail interview.

Getting past platform owners
However, there have been roadblocks along the way. For example, sales of digital publications for the Apple iPad were typically limited to single issues, according to a New York Times report. The Wall Street Journal also reported that Apple took a 30 percent cut from payments for newspaper and magazine apps sold through its appstore.

Apple, though, took steps on Tuesday to address these issues with the launch of a subscription service for the App Store. Publishers will now be able to set the price and length of subscription. Payment will be processed by Apple within the appstore and the company will collect 30 percent of the revenue.

CEO Steve Jobs said in a statement: “Our philosophy is simple. When Apple brings a new subscriber to the app, Apple earns a 30 percent share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.

“All we require is that if a publisher is making a subscription offer outside of the app, the same, or better, offer be made inside the app so that customers can easily subscribe with one-click right in the app,” Jobs said.

An article by Bloomberg had reported that European publications were unhappy about Apple’s plan to keep subscription billing for the digital issues within the iTunes stores, which meant Apple would have access to subscriber data.

On its part, Apple said its users may be asked for permission to share contact information with publishers–valuable data that could facilitate targeted marketing and advertising, as reported by the LA Times.

Ownership of the customer relationship is important to publishers, said Ovum analyst Tim Renowden, making the app platform owner’s control of content billing, payments, distribution and share of the revenue a thorny issue.

Foong noted in his e-mail that limitations set by Apple may not necessarily be adopted on other tablets. The iPad currently has a stronghold on the market, allowing Apple to dictate the terms of business, he said.

Increase bargaining power
The tablet and e-reader market segments are still in their infancy, as is the supporting ecosystem, so there is “much to look forward to”, Foong said. He added that it could be several years before players catering to the needs and acting as intermediaries join the ecosystem.

According to Lau, the subscription model–or lack thereof–boils down to the bargaining power of the content distributors.

He suggested publishers could work together or partner other companies such as Microsoft or Google to develop alternative platforms to compete with Apple to weaken its bargaining power. This could pave the way for more flexible approaches to the distribution of digitized publications through apps, he said.

Subscription is a powerful tool, Lau affirmed, and there is a need for more competition and alternative platforms to facilitate the distribution of digital publications.

He urged publishers to be more proactive and help develop such alternatives to increase their bargaining power.

Go digital or bust
Ultimately, roadblocks should not deter publishers from making the move to digital platforms.

“Publishers don’t have the luxury of ignoring digital,” said Ovum’s Renowden.

Print circulations around the world have been steadily declining for several years, partly due to the availability of free content on the Web, he said, adding that publishers “really have to go digital or go bust”.

But, they will need to find a delicate balance between being left behind by the transition to digital publishing and cannibalizing existing print revenues, he cautioned. The most appropriate business model varies “significantly” given the type of content and publisher, he added. For instance, boutique literature publishers have different business needs from a tabloid or a consumer electronics magazine, he said.

Renowden noted that most digital editions currently still tend to ape the print edition in layout and design, which tends to look clunky on a tablet screen.

The onus is on publishers to produce digital edition content that plays to the advantages of digital technology to improve the reading experience and demonstrate to readers the value of buying a digital edition, he said.

Doing so will also help justify the price of the digital edition, he added, noting that while money is spent on creating the content, most consumers perceive digital editions to be cheaper than their print counterparts since printing and distributions overheads are removed.

Google launches new subscription service, rival to Apple

In a not-so-shocking coincidence, Google announced its own subscription plan for publishers that allows content owners to set prices, terms and keep their relationships with customers.

The details of the plan were revealed in a blog post. Eric Schmidt highlighted Google One Pass in Germany. The timing of this move is almost comical. It’s as if Google was waiting for Apple to detail its in-app purchase plan for subscriptions, let the backlash ensue and then swoop in to let publishers know there are alternatives.

Google’s FAQ even addresses the question of why the search giant is launching Google One Pass. The answer: “Google cares a lot about helping high quality content thrive online and about the future of journalism.” Google should have said: “We have an opportunity to potentially kick Apple’s apps so we need your help.

Read more of “Google plots its own subscription plan for publishers, jabs at Apple” at ZDNet.

Apple App Store adds subscription service

Apple launched a subscription service at the App Store for magazines, newspapers, videos, and music bought through its App Store.

In a move that goes a long way to addressing concerns of many in the magazine and newspaper sectors, Apple said Tuesday that publishers will be allowed to set the price and the length of the subscription term. The processing of payments will be Apple’s job and handled within the App Store. Apple will collect 30 percent of the revenue.

“Our philosophy is simple,” Steve Jobs wrote in a statement. “When Apple brings a new subscriber to the app, Apple earns a 30 percent share. When the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing.

“All we require,” Jobs continued, “is that if a publisher is making a subscription offer outside of the app, the same (or better) offer be made inside the app, so that customers can easily subscribe with one-click right in the app”.

The iPad has proven to be a popular media-consumption device and magazine and newspaper executives are typically excited about the tablet‘s appeal as an e-reader. But to get their content on the iPad, some in the newspaper and magazine sectors are dissatisfied with the money Apple once offered–a 30 percent cut forever. They were also unhappy with the amount of control Apple would exercise over subscriptions and user data.

But this latest offer from Apple is more publisher friendly, said Chuck McCullagh, a former senior vice president with the Magazine Publishers Association of America.

Apple should become a significant channel and this might reduce pain [for publishers],” McCullagh told ZDNet Asia sister site, CNET. “If Apple brings a customer to app it gets 30 percent. When publisher brings new or existing subscriber, Apple gets nothing. That is an advance.”

But McCullagh, who is now a consultant and advises magazines on their digital strategies, also still sees some sticking points. Apple’s requirement that publishers must offer the same subscription for the app as it does out of it, could “bump into the common publisher practice of selling subscriptions at different prices across [distribution] channels”, McCullagh said. Some of those channels include the publisher’s Web site, direct mail and newsstands.

Apple said this is the same digital-subscription billing service that the company recently launched with The Daily app, created by News Corp. for the Apple iPad.

In that case as with the latest announcement, Apple is giving subscribers the option to provide personal information, such as name and e-mail address, to publishers. This won’t meet the needs of the publishers, McCullagh said, adding that publishers don’t want third parties overseeing their relationship with readers.

Apple said that the relationship between the publisher and the App Store isn’t exclusive. Publishers can sell subscriptions on their own site or offer free access to existing customers.

Subscriptions can be weekly, monthly, bimonthly, quarterly, biannual, or annual.

Publishers must provide their own authentication process within the app for subscribers who have signed up for service outside the App Store, according to Apple.

Top Microsoft ad exec departs for Facebook

After a seven-month stint at Microsoft, Carolyn Everson, who had served as the company’s corporate vice president of global ad sales and strategy, has left the company for Facebook.

AllThingsD, which was the first to report the news today, said Everson will take on the role of VP of global sales for Facebook, a spot that had been left back in late October by Mike Murphy.

Microsoft and Facebook remain business partners, with Microsoft having taken a US$240 million stake in the social-networking giant back in 2007. Employees have regularly gone back and forth between the two companies for jobs, though Everson represents one of the more high profile departures.

Before her time at Microsoft, Everson was COO and executive VP of U.S. ad sales for MTV Networks. Before that, she served in a number of executive roles for Primedia.

Microsoft and Facebook did not immediately respond to a request for comment.

Nokia’s Elop to sell remaining Microsoft shares

Nokia chief Stephen Elop is trying to rid himself of his numerous shares in Microsoft, he said at a press conference ahead of the start of Mobile World Congress in Barcelona.

After rumours emerged that Elop, who headed up Microsoft’s Office division before joining Nokia last year, was the seventh-biggest individual investor in his old employer and new business partner, he moved quickly to say he had never been in such a pecunious position.

“That is not true–that would be a very substantial sum of money which I do not have,” Elop insisted last Sunday, while conceding that he had “accumulated a very substantial position of Microsoft shares” while at that company.

Read more of “Nokia’s Elop to sell remaining Microsoft shares” at ZDNet UK.

Microsoft accuses former employee of cloud data theft

Microsoft has suspicions that an ex-employee retained strategic data after he left the firm for a position at rival Salesforce.com.

In an amended court motion, filed with a Washington State Superior Court last Thursday, Microsoft alleged that Matt Miszewski lied about retaining over 600MB of proprietary information after he left the company, according to reports.

“[The data] would be highly valuable to Microsoft’s competitors, including Salesforce.com,” Microsoft said in the motion, according to Computerworld, “both in terms of capitalizing on Microsoft’s efforts to prepare these materials, as well as revealing in detail Microsoft’s own competitive strategies.”

Read more of “Microsoft accuses former employee of cloud data theft” at ZDNet UK.

Nokia-Microsoft tie-up could shift mobile patent wars

There are many assured changes coming to the mobile world with the deal struck between Microsoft and Nokia last week. But an uncertain future scenario with broad implications concerns how the combination of Nokia’s very large patent portfolio and Microsoft’s slew of licensing deals will alter the mobile patent landscape.

Over the last two years it’s begun to seem as if all the major smartphone players are involved in one patent spat or another with Nokia a chief antagonist in the drama. The company has more than 10,000 patents and says it has reached licensing agreements with most major mobile phone makers to use some aspect of its technology.

In his presentation to investors last week announcing the milestone strategic shift for the Finnish handset maker, Nokia CEO Stephen Elop said the company has “one of the strongest patent portfolios out there” and that it will offer licenses to its intellectual property “at an appropriate royalty rate”.

Microsoft did not have a comment on how the partnership would specifically be structured in regard to the two companies’ patents. But the companies underscored Nokia’s strength in that area in the open letter from Elop and Microsoft CEO Steve Ballmer on Feb. 11: “We each bring incredible assets to the table. Nokia’s history of innovation in the hardware space, global hardware scale, strong history of intellectual property creation and navigation assets are second to none.”

They’re making clear they’re both counting on Nokia’s IP portfolio as an asset in this new strategic tie-up. And it’s become obvious that Nokia is very aware of the value of its patent portfolio and will not hesitate to get as much as it can for it from the industry.

In late 2009 Nokia went after one of the few holdouts that has yet to license any of its technology: Apple. Nokia accused the Cupertino, Calif.-based company of violating 10 mobile patents it owns. Apple turned around and slapped the world’s largest cell phone maker with a few patent violation accusations as well, and over the last year and a half the companies have gone back and forth picking apart each other’s IP portfolios and looking for ways to demand licensing deals from each other. With subsequent additions to the lawsuits, there are almost 40 patents involved now, and the spat has spread outside the United States to include the United Kingdom, Germany, and the Netherlands.

Apple has got deep pockets and a deep patent portfolio. Nokia is obviously no slouch and can handle itself on this front, so until now we’ve been set for a long slog through the courts before we arrive at an eventual cross-licensing deal between the two. But adding Microsoft to the mix could affect the course Nokia and Apple are currently pursuing.

Patent activist and blogger Florian Mueller wrote last week that he thinks this new partnership will have a powerful effect on the current dynamic in the world of mobile patents. Chiefly, he says, because Apple and Microsoft do not sue each other. That’s because, as he puts it, “they need each other”. It’s also probably related to the cross-licensing deal Apple and Microsoft struck 14 years ago when Microsoft invested US$150 million in Apple.

The beef between Apple and Nokia is over some pretty broad patents. Nokia says that for any phone to run on a GSM, 3G, or Wi-Fi network, it would have to license one of its patents, which Apple has refused. Apple for its part says Nokia’s smartphones rip off the iPhone’s display features: like scrolling and document translation, scaling, and rotation on a touch-screen display.

It’s possible that if Nokia does as it says and makes Windows Phone 7 the primary platform for its phones, that will obviate the need for Apple to continue to pursue its suit against Nokia.

Mueller also points to the possibility that Apple and Nokia could stop fighting each other and team up against Android–really Google and its handset partners–because Google’s patent portfolio, he says, is weak and poorly managed.

Alexander Poltorak, CEO of General Patent Corporation, says he sees no real possibility of that happening, for antitrust reasons and because of the self-interest of Microsoft, Nokia, and Apple.

“There’s so much competing with each other, I can’t possibly see any source of alignment between Nokia and Apple against Google,” he said. “I just can’t see it happening. They have too much going on against each other.”

However, the pieces for that scenario are already in place: Microsoft has sued Motorola saying its Android phones violate the company’s mobile IP. Apple and Motorola are also embroiled in a patent spat. And Apple is currently going after HTC, another high-profile Android handset manufacturer.

Even if they don’t officially or legally cooperate, should the three decide to tacitly team up and go after Android handset makers individually, the combination of Nokia, Microsoft, and Apple on the same side would be a major momentum shifter as the mobile platform wars play out.

Adhere to corporate values for long-term success

SINGAPORE–A sound set of beliefs that govern all actions and decisions made by a company and the steadfast adherence to these beliefs are what companies should focus on to enjoy long-term success and longevity in the fast-changing business landscape, says Samuel Palmisano, president and CEO of IBM.

These reasons, not popular products and devices, are key to IBM’s longstanding presence in the business industry as the company evolved from making clocks and cheese slicers to personal computers and analytics software today, revealed Palmisano, who was in town Friday to speak at IBM’s Centennial Lecture organized by the Lee Kuan Yew School of Public Policy.

Living out this philosophy, the IBM veteran said he solicited employees’ feedback on the management team’s performance in terms of sticking to the company’s core values through online “jams” after he became Big Blue’s CEO.

Elaborating on the importance of this practice, he pointed to Thomas Watson Jr., IBM’s chairman from 1952 to 1971, who verbalized its intrinsic value.

Quoting Watson, Palmisano said: “I firmly believe that any organization, in order to survive and achieve success, must have a sound set of beliefs on which it premises all its policies and actions. If an organization is to meet the challenges of a changing world, it must be prepared to change everything about itself, except these beliefs, as it moves through corporate life.”

For example, he noted that one of IBM’s values revolves around not being in a market segment that will not bring value to the company. This led to its decision to divest its PC-making business to China-based Lenovo in 2004, he said, noting that the PC business was becoming commoditized and the IBM needed to escape from this “commoditization hell”, he added.

These core values would also become the unifying factor for employees working in the global company which, to date, has offices in about 170 countries, Palmisano said.

He revealed that after gathering employees’ feedback on how IBM was progressing, the management team identified 100 things to focus on and broadcasted these areas to the entire company, telling them to keep management accountable to meeting these goals.

He said compliance and ethics are heavily emphasized by governments and within the industry today, but keeping to a company’s core values “goes beyond that”. “These regulations are just ‘programs of the day’ and are meant to address specific challenges in the current climate,” added the executive.

Palmisano suggested that to get long-term success, based on the experiences and lessons IBM have gleaned from more than a hundred years of experience, companies will have to “manage for the long term”. This does not mean adopting a mindset of “slow and steady” or being risk-averse. Rather, this management perspective is “not for the faint-hearted”, he stated.

“[Managing for the long term] often compels the enterprise to act when the direction isn’t obvious, to place bets that seem risky in the near term and to combat corporate inertia when times are good,” the executive explained.

This perspective would also determine how and where enterprises invest and allocate resources and shape their views on talent development, he noted.

Report: Jobs still very involved during medical leave

Just because Steve Jobs is on leave from Apple to focus on his health doesn’t mean he’s not still very involved at the company he founded.

The Wall Street Journal posted a story Thursday afternoon citing anonymous sources that Jobs is working from home on the upcoming launch of the iPad 2, as well as the next version of the iPhone, expected to arrive at the company’s annual developer conference in June.

Jobs “has been taking business meetings at home and on the phone”, according to the Journal‘s sources.

Apple’s CEO told employees last month that he would be taking a medical leave of absence, with no date pinpointed for his return, and said COO Tim Cook would act as interim CEO while he is away. Speculation has been rampant that Cook could eventually slide into the permanent CEO role if Jobs is too ill to return to the company.

The timing of the story Thursday works out remarkably well for Apple. The company’s stock took a mysterious sudden dive earlier that day, to the consternation of many investors. None could immediately pinpoint a reason for the stock’s drop from US$355 to US$349 in a matter of minutes before mostly recovering by the end of the day.

Being reminded that Jobs is still firmly in control despite his absence from the office should be calming for any nervous stockholders.

Reports: Nokia gung ho for Windows Phone

It looks increasingly likely that Microsoft’s Windows Phone 7 will get a starring role in Nokia chief executive Stephen Elop’s attempt to turn around the ailing phone giant.

Reports from Bloomberg and The Wall Street Journal indicate Nokia’s turnaround plan will involve phones using Microsoft’s new and still immature mobile operating system. Elop plans to detail his strategy for overhauling Nokia Feb. 11 at an analyst day in London.

Google’s Android, another contender for a software alliance, doesn’t look like it has good prospects at Nokia at present. “Two turkeys do not make an Eagle,” tweeted Vic Gundotra, vice president of engineering at Google, including a “#feb11” hashtag to make it clear he was referring to Nokia’s event on that date.

Elop, who arrived from Microsoft to take over Nokia a few months ago, offered a scathing assessment of Nokia’s phone strategy thus far. In his “burning platform” memo, he said Nokia failed to answer Apple’s iPhone at the high end, respond to Google’s Android operating system spreading to the midrange and lower-end smartphones, or stem the tide of inexpensive Chinese phones. And its own operating systems are a mess, with Symbian not up to the modern smartphone challenge and the higher-end MeeGo only just dipping its toes into the waters with a single phone coming late in 2011.

It’s easier for an outsider to be brutally honest, of course–especially when it’s all part of a campaign to pave the way for the would-be answer. Elop plans to deliver that half of the speech on Friday.

An alliance with Microsoft makes sense at one level: both companies are powerful but at a serious disadvantage to incumbent players–Apple, Google, and a host of phone makers including HTC, Samsung, Motorola, Sony, and LG Electronics that have embraced Android.

Nokia has clout in the mobile market–deep relations with carriers and phone retailers, for example. And Microsoft has clout with developers. An alliance between the companies could convince developers that Windows Phone 7 is more likely to get the critical mass needed to justify writing software.

But it’s no slam dunk. Windows Phone 7 is already a late arrival, and it’s not clear how many application ecosystems developers want to support. And unlike Android and iOS, it doesn’t span to the tablet level, where Microsoft prefers its older Windows ecosystem.

Relying on another company’s operating system yields a lot of control of the ecosystem to that company, as countless Windows PC companies and Android phone makers know. Apple has a great deal more control over its destiny with its own integrated hardware and software for mobile devices–control that’s nice as long as you have a relevant ecosystem developers are eager to sign up for.

Nokia still has that possibility of unified hardware and software with MeeGo, of course. But the more serious its commitment to Windows Phone 7–and thus the more likely that initiative will be to succeed–the harder it will be to convince developers to later add MeeGo to the mix.

Cisco calms fears with solid 2Q performance

Cisco Systems allayed concerns about its second quarter results with earnings that topped expectations. But the outlook for the third quarter fell short of expectations as Cisco said it is seeing pricing pressure for its Catalyst switches.

The networking giant reported fiscal second quarter earnings of US$1.5 billion, or 27 cents a share, on revenue of US$10.4 billion. Non-GAAP earnings were 37 cents a share. Wall Street was expecting earnings of 35 cents a share.

As noted in a preview, analysts were expecting Cisco to rebuild its order backlog. Demand throughout the quarter looked solid. Indeed, Cisco CEO John Chambers said “the quarter played out as we expected”.

Read more of “Cisco has solid second quarter, but cuts outlook as switching products under fire” at ZDNet.

Manpower top concern for S’pore IT firms

Manpower issues will continue to cloud this year’s business environment for Singapore IT organizations which are calling for the local government to initiate schemes to address the challenge, according to a new survey.

Released by the Singapore Infocomm Technology Federation (SITF) Wednesday, the survey of 126 local IT companies found that manpower issues will remain key challenges for these businesses in 2011. Multinational corporations (MNCs) comprised 29 percent of the respondents while the rest were local infocomm enterprises.

The study listed workforce-related issues as the top three business concerns, where manpower cost as well as the ability to recruit the right talent both ranked as the top concern, at 86 percent. Some 73 percent of respondents pointed to the ability to retain talent as the other business concern.

According to the report, the most difficult job vacancies to fill were solutioning and architecturing, sales and marketing, project management, CIOs, CTOs and IT managers, software development and research and development.

A third of the respondents felt that the manpower situation had worsened compared to last year. Anecdotal feedback pointed to the tightening of the supply of foreign talent as one of the compounding issues, reported SITF.

In addition, manpower worries extended beyond talent recruitment. According to the survey, 59 percent of respondents highlighted the lack of local talent and high cost of labor as barriers to productivity.

SITF Chairman Tan Yen Yen said the survey is part of the industry group’s efforts to keep track of business sentiments as well as engage in dialogues with government agencies to address issues and concerns faced by the local IT industry.

Aside from tracking the performance and outlook of local companies, the survey also asked respondents what they would like to see in the upcoming Singapore Budget 2011. The IT companies, especially local enterprises, expressed hope of seeing government schemes that address the issue of talent shortage and attract more students into the IT sector.

More Singapore companies to extend overseas
On a brighter note, the report unveiled that more Singapore companies were looking to extend their market overseas. Some 87 percent said they were likely to continue or increase their efforts in developing overseas markets, which SITF noted was a “significant increase” compared with 71 percent last year,

Many respondents also ranked government support for market creation and development high on the wish list for Budget 2011, the report said, adding that local businesses expressed hope that this year’s national budget will foster an environment conducive to internationalization.

The study also found that local ICT companies continued to recover from the 2008-2009 economic downturn. In fact, 73 percent of the respondents achieved positive business growth last year compared with 61 percent in 2009.

However, SITF noted that profit growth still lagged behind top-line performance and was dragged down by an increase in underlying costs such as the cost of manpower.

ISP partnership key to APAC cloud services

Cloud and remote managed IT services providers targeting small and midsize businesses (SMBs) in the Asia-Pacific region will find it increasingly necessary to work with Internet service providers to tap this market segment.

In a report released Monday, AMI-Partners noted that Internet infrastructure plays a key role in the adoption of cloud and remote IT services among smaller enterprises in the region, excluding Japan.

Daniel Sim, director of strategic engagements at AMI-Partners, said SMBs in countries that have strong connectivity and Internet infrastructure benefit most from software-as-a-service offerings and remote services. “Technology vendors offering cloud-based solutions and remote managed IT services will find it necessary to work with infrastructure service providers even more now than before, to explore go-to-market approaches in reaching out to these SMBs” Sim said in the report.

AMI-Partners said cloud and managed IT services providers should target SMBs in the “Wave II” category, where these businesses are on the lookout for technologies to connect their enterprise to enhance their competitiveness.

The research firm categorizes the adoption of IT into three “waves”. In Wave I, enterprises are focused on building their basic infrastructure, and in Wave II their focus shifts to connectivity. In Wave III, enterprises look to extend their reach to customers and business partners.

According to AMI-Partners, the top 10 SMB IT spending this year will be on either cloud-based or remote managed services, and at least six of these are on technology related to enterprise connectivity. Video conferencing, SaaS productivity and remote managed PC services are ranked highest in the Top 10 list of IT spend, according to the report.

The research firm predicted that 2011 will see more SMBs continuing to understand how “as-a-service” will impact their business in the long run. These companies will also weigh the cost of investment in such services versus ownership, said the report.

SMB’s mindset change also indicates they are looking at investments in “a more accountable and transparent manner”, which makes them more cautious but also more informed.

AMI-Partners said: “Vendors need to balance their go-to-market approach with the right message, the right delivery model and the right solutions for the right target segment.”

Asian IT services boast ‘strong’ 2010

Spurred by an unusually high total contract value (TCV) in the fourth quarter of 2010, IT services deals in the Asia-Pacific region churned more than US$9.5 billion last year, according to a new report from Ovum.

In a statement Tuesday, the research firm’s analyst and report author, Ed Thomas, said both the global and regional IT services market “exploded into life” thanks to a string of mega-deals inked between October and December last year.

Global TCV reached US$49 billion in the final quarter of 2010. In the Asia-Pacific region, this figure amounted to US$2.6 billion, a 25 percent increase over the same period in 2009. The region’s fourth-quarter showing bucked a trend of constant decline in TCV since 2005, the research firm noted.

Jens Butler, Ovum’s Asia-Pacific principal analyst for IT services, added that the region had “an exceptionally strong 2010”. The Asia-Pacific services industry did not experience a substantial turnaround compared to the previous year, vis-à-vis the global market, but Butler attributed this to the milder impact of the global economic downturn on the region.

According to Ovum, more than 40 outsourcing contracts were inked in the fourth quarter alone, with deals averaging above US$60 million. They included agreements between China Unicom, China Telecom and China Mobile with Alcatel-Lucent, valued at US$1.6 billion, as well as Australian Bluescope Steel’s partnership renewal with CSC in an eight-year relationship worth US$300 million.

Smaller, shorter deals
Despite the flurry of large deals in the Asia-Pacific IT services market in fourth-quarter 2011, average contract value for the year dropped to less than US$40 million–a first since 2003. Ovum added that this trend of smaller deals was also evident in the global market.

Butler also pointed to shorter contracts as another concurrent trend in the region, where the average length of deals in January 2011 dropped to below 43 months.

He said the increase in deal size might be “a sign of the releasing of purse strings” but noted that this should be considered “in the context of an ongoing buying cautiousness” across the Asia-Pacific region, as evident from the shorter client-outsourcer relationships.

Apple remains king of film downloads

Netflix may be the Web’s top movie rental service, but nobody sells more download-to-own movies than Apple, according to market research by iSuppli.

Apple’s iTunes accounted for 64.5 percent of all the money spent in 2010 on electronic sell through (EIS) and Internet video on demand (IVOD) despite facing increased competitive pressure from Microsoft’s Zune (Xbox), Amazon, Sony’s Playstation, and Wal-Mart.

“Microsoft in 2010 accounted for 17.9 percent of U.S. movie EST/IVOD consumer spending, up from 11.6 percent in 2009,” iSuppli found. “Sony in 2010 maintained the No. 3 position in the U.S. with a 7.2 percent share, up from 5.7 percent in 2009.”

Apple, however, did give up some ground last year. In 2009, iTunes held 74.4 market share, and its share fell 9 percent last year, according to iSuppli. The good news is that the overall market grew by more than 60 percent. Could this increase in download sales have hurt DVD sales?

Last week, several of the top Hollywood studios reported dismal disc sales in the holiday quarter.

According to iSuppli, Apple managed to hang on to such a big market lead with the help of the iPad and the upgraded Apple TV, the research firm said.

“We expect that in the United States, Apple’s strong performance in IVOD will allow it to continue to bypass the video-on-demand services offered by many major cable operators.”

Here’s more from iSuppli about how competition is heating up in the sector.

Competition from Microsoft intensified…because of the highly successful launch of its Kinect 3D motion controller system for its Xbox 360. This resulted in a bumper fourth quarter for movie revenue on the Zune Video platform, cementing the No. 2 market rank for Microsoft.

Wal-Mart’s aggressive drive for market share for its U.S. online movies service Vudu has generated a spike in consumption for the service starting in the fourth quarter of 2010. The company announced $0.99 promotional pricing on IVOD movies and support for a wider range of living room devices, including Sony’s PlayStation 3 video game console.

AOL to buy Huffington Post for US$315M

In a shocking post-Super Bowl announcement, AOL said Tuesday it has agreed to pay US$315 million for the Huffington Post and form a new media powerhouse by combining the content of both organizations.

The resulting new outfit, which will be headed by HuffPo co-founder Arianna Huffington, will be called Huffington Post Media Group and feature all the content from previous AOL acquisitions including Engadget and TechCrunch. By doing so, AOL seems intent on convincing the world that it is deadly serious about reclaiming its place among the leaders of the digital media world.

In a story posted at midnight Eastern time, Huffington wrote that the new media group is expected to have a reach of 117 million Americans and 270 million people worldwide.

In addition to bringing together the HuffPo, Engadget, and TechCrunch, the move will also add other AOL properties including PopEater, Mapquest, Moviefone, and others. All told, the idea is clearly that the group will offer content aimed at the widest-possible range of readers: politics junkies, techies, housewives, car nuts, movie freaks, and more. By doing so, it will be well-positioned to take on the other leaders in the mainstream online media space, such as Gawker Media.

After becoming one of the largest players in the media world in the 1990s and then falling hard, a staggering roller coaster ride that crashed after its early 2000 ill-fated 12-figure purchase of Time Warner, AOL has been trying of late to resurrect its brand. In September, it purchased Michael Arrington’s well-regarded and popular TechCrunch, and now, by buying the HuffPo and its claimed 25 million unique monthly visitors, AOL is stating loud and clear that it is back and demanding to be taken seriously.

The Huffington Post is one of the most-read online properties, and it is seen as a leader in politics, entertainment, women’s issues, and much more. TechCrunch is a leader in tech business news, and Engadget is one of the most successful gadget blogs in the world. Now, AOL controls all three.

Though HuffPo has a sterling reputation among readers and a popular, high-profile figurehead in Arianna Huffington, it does not come without controversy. In its February issue, “Vanity Fair” magazine reported on a lawsuit filed by two Democratic Party insiders who claim they were uncompensated and unrecognized co-founders of the hit blog. In the article, Huffington refused to comment, but in court papers was said to have denied the merits of the suit.

In a statement late Monday, AOL and Huffington said she will become president and editor-in-chief of The Huffington Post Media Group. The deal is expected to become final late in the first quarter or early in the second quarter of 2011, the companies said.

Call for Apple CEO succession plan gains support

An influential investor advisory group has added its support to an Apple shareholder proposal that calls on the company to disclose a succession plan for CEO Steve Jobs.

Jobs announced last month that he was taking an indefinite medical leave from company–his third in recent years–and handing over day-to-day responsibility to Chief Operating Officer Tim Cook, who filled in for Jobs while he was on medical leaves in 2004 and 2009. However, concern over the current health of Jobs, a pancreatic cancer survivor, and shareholder complaints about a lack of information from the company regarding his condition have led to demands that Apple reveal an executive succession plan.

Institutional Shareholder Services has endorsed a proposal for such a plan offered by the Central Laborers’ Pension Fund, an Apple investor that holds about 11,500 shares, or about a thousandth of 1 percent of outstanding shares. The proposal calls for Apple’s board of directors to report each year on the state of its succession plan.

In ISS’ analysis, which was announced today by the Laborers’ International Union of North America–another supporter of a public succession plan–the proxy voting service said:

All companies should have succession planning policies and succession plans in place, and boards should periodically review and update them. ISS believes that shareholders would benefit by having a report on the company’s succession plans disclosed annually. Such a report would enable shareholders to judge the board on its readiness and willingness to meet the demands of succession planning based on the circumstances at that time.

Apple shareholders will likely get a chance to vote on the proposal at the next shareholder meeting on Feb. 23, the labor union said in a statement today.

Apple representatives did not immediately respond to a request for comment, but Apple’s board of directors said in regulatory filings in January that it has recommended shareholders vote against the proposal. Apple said it already has established a succession plan and disclosing it publicly would only hurt the company’s ability to retain and recruit top executive talent.

In January 2009, Jobs said that he was suffering from a hormone imbalance that was impeding his body’s ability to absorb certain proteins. In April of that year, Jobs underwent liver transplant surgery and returned to work by early July. In August 2004, Jobs underwent successful surgery to treat a rare form of pancreatic cancer, which sidelined him until September of that year.

While Cook filled in as Apple’s chief executive on both occasions and demonstrated an ability to execute on Jobs’ big-picture plans already in place, what makes investors nervous is the thought of an Apple without Jobs–its founder, visionary, and public face.

“There’s a lot of indication that Apple is set up for the future,” DisplaySearch analyst Richard Shim previously told CNET’s Erica Ogg. “They have a lot of talented personalities. The problem is that all these talented people report to one of the most charismatic and influential guys in technology.”

Besides Cook, that group includes Phil Schiller, the head of marketing, who hones Apple’s sales pitch; CFO Peter Oppenheimer who manages Apple’s bottom line; Jobs’ design guru, Jonathan Ive; the senior vice president of Apple’s vast retail operation, Ron Johnson; and the men who head up hardware engineering (Bob Mansfield) and software engineering (Bertrand Serlet).

Cloud demands blend of business, technical skills

The nature of cloud computing does render some IT functions obsolete, but market observers point out that any professional’s best bet in the evolving IT job market is to possess both advanced technical skills and strong business sense.

Arun Chandrasekaran, research director for Frost & Sullivan’s Asia-Pacific ICT practice, told ZDNet Asia in an e-mail the “cloud has the potential to shift manpower requirements from blue-collar IT workers to white-collar IT workers”.

According to him, “basic IT jobs that can be easily automated” are typically the first types of jobs to be threatened by the cloud computing shift, such as desktop support, server configuration, and application installation. To stay relevant in the job market, IT staff should re-tool themselves and move away from mundane tasks to highly-skilled functions such as architecture formulation or business process reengineering, he recommended.

An organization that deploys infrastructure-as-a-service, for example, will find infrastructure-related jobs redundant, explained Kevin Noonan, research director at Ovum. This is because the data center and all related infrastructure roles–from choosing, purchasing and configuring the hardware–will be managed by the cloud service provider.

Industry shift
In an e-mail, Noonan said there has been “a clear trend of IT moving out of the backroom and into the business suite”. That is why the most-sought after IT workers are the ones who have both a practical understanding of technology and can also communicate, advocate and deliver outcomes within the wider enterprise, he added.

“The key to long-term employability will rest on a person’s ability to balance technical and business skills,” said Noonan. “People who get the balance right will continue to be in high demand.”

Frost & Sullivan’s Chandrasekaran concurred, noting that there will “certainly be less demand for ‘hands-on’ technical experts”. This makes it critical for an IT worker to marry technical knowledge with business acumen, he said.

Recruitment specialists and hirers also echoed the view that the increasingly bigger stake IT enjoys in the boardroom has also led to greater demand for candidates with both business and tech expertise.

Annie Lim, manager of IT commerce division at executive recruitment firm Robert Walters, noted that a number of companies are exploring cloud computing and evaluating what the technology can offer to their business.

With moves such as virtualization, organizations now have less hardware to manage as well as make fewer investments in hardware, leaving them to focus more on strategic and management type of roles instead of jobs that deal strictly with IT, she said in an e-mail.

“It is important for IT professionals today to possess both technical and business skills, especially as IT support is no longer just a backend [role] but involves engaging with both business users and stakeholders,” said Lim.

John Galligan, regional director for Internet policy at Microsoft Asia-Pacific, said in an e-mail that the role of the IT professional is changing because IT has progressively taken on a more strategic role business decision-making in the last few years and is now seen as an engine affecting business growth and productivity.

Cloud impact on IT jobs still unclear
According to him however, the cloud does not threaten jobs but instead creates new opportunities. In the near future, companies will increasingly need to ensure that their IT staff are cloud-competent, and cloud computing skills could eventually become a mandatory job requirement, he said.

Galligan added that even if the cloud had not been in the picture, IT jobs are not the same as they were a decade ago. “From [Microsoft’s] current perspective, the cloud is a driver of growth, but in years to come, it will be the norm,” he said.

Ovum analyst Noonan agreed that cloud computing should not be seen as having a straightforward impact on IT jobs, whether in generating new jobs or eradicate existing ones. Furthermore, the definition of cloud computing will evolve over time, driven by commercial realities, he pointed out.

“The more rigid, academic definitions [commonly] used today are just the starting point for a far more innovative mix of services [for jobs to fill],” he said.

Microsoft earnings get boost from Xbox, Office

Microsoft beat Wall Street’s expectations today with its fiscal second quarter earnings.

For the three months ended December 31, Microsoft earned US$19.95 billion in revenue, or 77 cents per share, on US$6.63 billion of net income. Analyst estimates from earlier in the week had pegged the software giant’s revenues at 69 cents per share on $19.2 billion in revenue.

In the same quarter last year, Microsoft earned 74 cents per share on revenue of US$19 billion, though that included US$1.7 billion in sales that had been deferred from the previous quarter because of Microsoft’s Windows 7 coupon program. Not including that deferment from last year’s numbers during the same quarter, Microsoft said that its second-quarter growth rate for revenue was 15 percent, with earnings at 28 percent.

The star of the quarter was Microsoft’s Entertainment and Services division, which saw a 55 percent growth, bolstered by breakout sales of the Kinect at more than 8 million units and the Xbox 360 console, which topped 6.3 million unit sales. Microsoft also attributed the group’s success to subscriptions of Xbox Live, which went up 30 percent year over year, and strong Xbox game sales.

“We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect. The 8 million units of Kinect sensors sold in just 60 days far exceeded our expectations,” Peter Klein, chief financial officer at Microsoft, said in a statement.

Also pushing high, double-digit growth was Microsoft’s Business Division, which grew 24 percent year over year. Microsoft attributed some of that success to Office 2010 being the fastest-selling version of the software suite for consumers. The group also posted a 9 percent growth in its multi-year licensing revenue, as well as double-digit growth of revenue from its SharePoint, Lync, and Dynamics CRM products.

Missing entirely from Microsoft’s earnings release was mention of Windows Phone 7, which launched in Europe and Australia in late October, and in North America in early November. Yesterday Microsoft announced sales of 2 million of the devices since its launch, though that was to mobile operators and retailers and not necessarily customers. During the company’s conference call, Microsoft chief financial officer Peter Klein said that the company was pleased with the initial response, but that the company still has “a long road ahead of us”.

As for PC sales–something of interest to analysts and investors alike given recent reports of a sales slowdown–Microsoft said that the total OEM revenue growth was 2 percent for the quarter. That’s including an adjustment for last year’s deferred revenue from Windows 7. Going into the next quarter, Microsoft said it anticipates segment revenue in Windows and Windows live to be in line with PC market growth. Even so, the company said that it’s now sold more than 300 million licenses of Windows 7, making it the fastest selling operating system ever.

Meanwhile, Microsoft’s Online Services Division, which includes Bing, MSN, and the company’s advertiser and publisher tools, posted a US$543 million loss. That’s slightly better than last quarter’s US$560 million, but not by much.

This article was first published as a blog post on CNET News.

Amazon has its first US$10B quarter

There were some surprising tidbits in Amazon’s quarterly earnings release on Thursday.

Sales topped US$10 billion for the first time. In spite of the threat that Apple’s iPad presents for its Kindle e-book reader, Amazon announced that its Kindle e-book sales now top paperback book sales; they were already more popular than hardcover books. However, the 36 percent increase in revenue, unfortunately, still fell short of Wall Street’s high expectations for the steadily growing e-commerce company.

Sales reached US$12.95 billion for 2010’s holiday-heavy fourth quarter, up from US$9.52 billion in the fourth quarter of the previous year. Amazon noted that this 36 percent increase would have been 37 percent had it not been for the US$139 million shaved off it from unfavorable changes in foreign exchange rates. Operating income was US$474 million, down slightly from US$476 million in the fourth quarter of 2009.

Amazon had expected that Kindle book sales would surpass paperback book sales in the second quarter of 2011 (the count excludes free Kindle titles), so the milestone was reached earlier than expected. Also in last year’s final quarter, it sold three times as many Kindle books as hardcover books.

This article was first published as a blog post on CNET News.

Microsoft offers up tips, stats on location privacy

There are some do’s and don’ts with location sharing. Things like not publicly posting geo-tagged photos of gold bricks near open windows, or alerting the world to your extended absence are the more obvious ones. But not everyone knows these things, which is why Microsoft is sharing some tips of its own based on research it commissioned around location-based services.

The 1,500-person survey, which was conducted last December, involved people in the United States, the United Kingdom, Canada, Japan, and Germany, and was slated to be discussed by Microsoft’s Chief Privacy Officer Brendon Lynch during a panel discussion yesterday at San Francisco’s Churchill Club. The survey is also a larger part of Data Privacy Day, which takes place this Friday.

In a post on the company’s Microsoft on the Issues blog, Lynch wrote that only 51 percent of the survey’s respondents had used a location-based service before, but that 94 percent of that group found them “valuable”.

Though the key concern among those who were surveyed seemed to be consent, with 84 percent saying that they were worried about services that would share location without asking. Four percent said they would feel better about location-based services “if they could easily and clearly manage who sees their location information”. To that end, Lynch said that customer notifications and consent, along with “user-friendly privacy controls” were part of the company’s privacy standards.

In any case, Microsoft has laid out some platform-agnostic guidelines to limit risk when sharing location:

Pay close attention to the location privacy settings on phones, social networking sites and online applications.

Don’t ‘check in’ on location-based social networking sites from home, and don’t include GPS coordinates in tweets, blogs or social networking accounts.

Limit who you add to your social network location services, and do not make your location data publicly available or searchable.

Don’t geo-tag photos of your house or your children. In fact, it’s best to disable geo-tagging until you specifically need it.

Only trusted friends should know your location. If you have contacts you don’t fully know or trust, it’s time to do a purge.

Some of these things are obviously easier said than done. What’s arguably made it more difficult is that the number of Web services that make use of user location and share that information has increased dramatically, as have their popularity. And it’s not just check-in services such as Foursquare and Gowalla. It’s extended to social networks like Twitter and Facebook, as well as with photo sharing tools like Picplz, that add location as part of shared content or status updates.

Last year, a site called Please Rob Me famously cropped up that would aggregate geo-tagged check-ins from various check-in services and post them in a large feed in order to draw attention to the dangers of location sharing. The site has since shut its doors, saying that it was “satisfied” with the attention it had received. Though if Microsoft’s survey data is any indication, there’s still a large group of people that have never heard of the problem the site was trying to solve.

EU approves Intel-McAfee purchase

European Commission antitrust regulators have given the go-ahead for chipmaker Intel’s multibillion-dollar acquisition of security specialist McAfee.

The Commission said on Wednesday that it has approved the deal between the Santa Clara, California-based companies, subject to conditions around the potential bundling of Intel’s hardware with McAfee’s security products. EU regulators were specifically concerned that security software from other companies “might have suffered from a lack of interoperability with Intel CPUs and chipsets”, it said.

To allay the EU’s concerns, Intel has promised to ensure that rival security vendors will have access to “all necessary information” to use the functionalities of Intel’s CPUs and chipsets in the same way as those functionalities are used by McAfee, the commission said in a statement.

Read more of “Intel-McAfee purchase gets EU approval” at ZDNet UK.

Wireless chipsets hit 2B in 2010

Increasing demand for netbooks and media tablets helped push the worldwide shipment of wireless connectivity chipsets to approximately 2 billion last year, according to new estimates from ABI Research.

This figure represents a 22 percent increase over 2009, the research firm said, noting that these are based on preliminary estimates pending the release of the final numbers for 2010.

Published Tuesday, the report attributed the robust demand for chipsets to the surging sales of netbooks, media tablets and other “always connected” consumer and industrial electronics products.

This growth will continue in the medium term, predicted Celia Bo, ABI’s industry analyst.

She noted that the total shipment of wireless connectivity chipsets is projected to reach 7 billion units in 2015, growing at a compound annual growth rate (CAGR) of 30 percent between 2010 and 2015.

ABI noted that Bluetooth will lead the overall chip shipment accounting for 60 percent of the market, followed by Wi-Fi chips at 38 percent. The latter is expected to achieve the highest growth rate among connectivity chipsets, clocking a 22 percent CAGR.

According to the research firm, the increasing demand for Wi-Fi enabled mobile and consumer electronics devices is also driving demand for the chips. The volume of Wi-Fi enabled mobile handsets shipped grew 50 percent over 2009, while the adoption of Wi-Fi mobile technology is set to reach 32 percent in 2015.

Overall shipment of Wi-Fi enabled consumer devices such as game consoles, increased by 18 percent compared to 2009, said ABI. Popular consumer gadgets such as digital still cameras (DSCs), camcorders, DVD players and set-up boxes will also post strong growth in the coming years, the research firm predicted.

It further estimated that between 2010 and 2015, the CAGR of Wi-Fi enabled DSCs and TVs are expected to reach 63 percent and 65 percent, respectively, followed by DVD players at 47 percent.

IT managers must evolve in cloud-based world

KUALA LUMPUR–IT managers must start evolving or risk being phased out in an enterprise landscape that is increasingly turning to cloud services, cautions an industry analyst.

Errol Rasit, principal analyst for data center systems at Gartner, said in today’s emerging cloud computing paradigm, IT managers would worry about their jobs as they would have fewer responsibilities to manage in the data center as processes are moved to the cloud.

“An IT manager fears for his job because cloud computing actually externalizes IT infrastructure out from a data center,” Rasit told ZDNet Asia on the sidelines of Microsoft Malaysia’s cloud seminar here Tuesday. “As a result, data centers may need fewer people to administer and that’s where operational savings typically come from.”

He noted that with the burgeoning cloud services providers appearing in the market, an application owner that wants more capacity and processing power can theoretically bypass an IT manager and deal directly with a cloud provider to acquire the increased capacity.

However, the Gartner analyst added that this might not be the best scenario for a company because application owners could end up choosing a cloud computing provider that did not comply with strict regulations and specifications, such as security and application performance, needed for an application to operate smoothly.

“The role of the IT manager has to change to become one that governs which service provider is suitable for use,” Rasit said. “He may need to have a ‘menu’ of pre-approved providers so that he can offer an option to application owners that need the capacity, while ensuring that all the technical specifications are met.”

Asked who should drive these changes in the IT manager’s role, he stressed the need for this to be a top-down approach.

“The change in role must be driven from the C-level downward. Systems administrators and IT managers need to be retrained and recertified so that they can make the companies they work for more agile and more tuned in business needs,” the analyst explained.

Growing cloud interest
According to Gartner, Malaysia is seeing increasing interest in cloud computing. Rasit noted that about 50 percent of large enterprises globally indicated plans to invest in cloud services this year, and small to midsize businesses were starting to follow suit.

Ananth Lazarus, managing director of Microsoft Malaysia, said the adoption of cloud computing is taking shape at almost all levels in the local market and in various verticals. “In my meetings with various industry leaders in the past eight to nine months, there has been talk about cloud computing and how it can help with their businesses,” Lazarus said at a media briefing following the seminar.

He noted that one local company that has benefited from adopting cloud services is Syarikat Takaful Malaysia. A leading Islamic insurance provider in Malaysia with a staff strength of about 1,000, Takaful Malaysia recently deployed Microsoft’s Business Productivity Online Standard Suite, effectively becoming the first company in the country to outsource its file and e-mail infrastructure to Microsoft’s cloud services.

“All in all, the cloud in Malaysia will gain more substance,” Lazarus said. “Customers will want real-world applications that meet specific needs and will look at vendors that can provide end-to-end solutions.”

Edwin Yapp is a freelance IT writer based in Malaysia.

Non-IT companies to enter cloud service fray

SINGAPORE–As companies enhance their business processes and, over time, become specialists in specific niches, they will repackage these processes into software-as-a-service (SaaS) offerings to their competitors and become cloud service providers, an analyst said.

Brian Prentice, research vice president at Gartner, said that regardless of the verticals they are in, non-IT Global 500 companies that have an “interesting” business process would be able to monetize it by making available the service through cloud computing, specifically through SaaS.

By 2015, about 20 percent of these non-IT companies will enter the cloud fray as service providers, he forecasted during Gartner’s Predict 2011 conference held here on Tuesday. He cited automaker Volvo, which had earlier made available its service maintenance process to rival BMW, as an example.

“Previously, I would ask these companies that want to monetize their business processes if they are ready to become a software company, and many would say ‘no’. Today, with cloud computing, these companies can sell interesting business processes via the cloud without having to dilute their core competencies,” the analyst noted.

Fellow Gartner vice president, Andrew Rosell-Jones, added that this development is part of the shift from a cloud environment for “mass consumption” and plagued with security challenges, to a more “hygienic, capabilities-based” cloud space.

During his presentation, Rosell-Jones likened the cloud computing arena now to the car industry of Detroit in the 1970s. Automobiles then were churned out in mass volumes, similar to today’s SaaS– or infrastructure-as-a-service-based offerings.

However, as the security issues and challenges are gradually mitigated, there will be more non-conventional service providers entering the space to offer “capabilities on-demand”, complementing products introduced by pure-play cloud service vendors, he said.

Web sales from social engagements
Prentice also observed that social media and mobile computing trends will play an increasing role in spurring companies’ Web sales. He predicted that about 50 percent of companies’ Internet-based income will be generated by their social presence and mobile apps by 2015.

Enterprises, however, have not figured out how to make use of social media to drive sales, he added. “The social space is a tricky one where there will be more failures than successes,” the analyst pointed out.

Prentice added the “advent of social bots” is emerging as an outlet to drive consumer engagement and provide value-add in business-to-consumer (B2C) relationships.

Social bots, he explained, are simply automated ways of “crawling” information on the Web and social networking sites such as Twitter for commonalities among Internet users. By making sense of these patterns, companies can better understand what their target customer base’s needs and wants are.

Travel guide company Lonely Planet, for instance, has taken up the role of a “trusted arbiter” of good travel content for its followers, Prentice said. The company will source for informative travel information, articles and tips and “push” the content to its followers. The next step would be to automate the process, which is where social bots come into the picture, he explained.

As a result of tools such as social bots, the analyst predicted that about 10 percent of one’s online “friends” will be non-human by 2015.

Microsoft sued over refunds on Windows copies

A class action lawsuit against Microsoft has been filed in Italy by a group claiming that it’s too difficult to procure a refund for the copies of Windows that come bundled in new PCs.

The case, which was filed in Milan by the Associazione per i Diritti degli Utenti e Consumatori (ADUC), and picked up by The Register earlier Tuesday, points to Microsoft’s end user license agreement (EULA)–as outlined in various copies of Windows–noting that once users turn their computer on and begin to use it, they are no longer able to return the software for a refund.

Furthermore, the group says consumers who buy computers with OEM copies of Windows installed have more difficulties in getting a refund than those who purchased a retail copy of the OS. The lawsuit notes that users who buy and install the OS itself, but that don’t agree to the EULA, are entitled to a return from the place where they bought it. OEM buyers, however, are at the whim of their system seller or installer for a refund, which has historically proven to be a difficult process, it says.

To avail these issues, the class action suit seeks a hearing and also to nullify the section of the EULA that requires users go to OEMs instead of Microsoft for refunds.

When asked for comment, a Microsoft representative said it should be pointed out the company’s licensing agreements with OEMs are non-exclusive, and that users are “free to purchase PCs with a non-Microsoft operating system, or without any operating system,” but that having Windows preinstalled “provides the best user experience.” Even so, the represenative reiterated that any returns or refunds still have to be handled through the OEM, and not Microsoft itself.

“Customers who purchase a PC from an OEM with Windows preinstalled and then wish to return the PC and/or the preinstalled software should consult the OEM’s return/refund policies,” the spokesperson said.

Twelve years ago, a group of Linux users in the United States sought refunds for OEM copies of Windows as part of a campaign called “Windows Refund Day.” Instead of going to OEMs though, as Microsoft outlines in its EULA, those users went directly to the company’s offices in Silicon Valley. Even then though, Microsoft pointed users back to the PC makers, saying “when a consumer purchases a new PC, the license for Windows resides with that specific PC maker, and each PC maker has its own process for working with customers on licensing issues.”

You can see copy of the lawsuit, which is in Italian and is a PDF, here. There’s also the group’s statement, also in Italian, here.

Update at 12:33 p.m. PT: A Microsoft spokesperson outlined its current policies to ZDNet Asia’s sister site, CNET. These have been reflected in the updated version of the above article:

“Consumers are free to purchase PCs with a non-Microsoft operating system, or without any operating system. However, consumers benefit from the pre-installation of Windows on PCs. It provides the best user experience from the time a consumer first turns on the PC, and saves consumers the substantial effort and resources associated with having to install an operating system that functions properly.

Computer manufacturers (known as original equipment manufacturers, or OEMs) are free to sell PCs preinstalled with another operating system or no operating system at all.

It’s also important to note that Microsoft’s agreements with OEMs are nonexclusive. Customers who purchase a PC from an OEM with Windows preinstalled and then wish to return the PC and/or the preinstalled software should consult the OEM’s return/refund policies.”

This article was first published as a blog post on CNET News.

Precision marketing can quell privacy fears

Armed with the right tools, businesses can use precision marketing to send relevant messages to their customers who, in turn, are able to fine-tune the level of privacy and communication channel they are most comfortable with.

In interview with ZDNet Asia, Rohan Vaidya, Asia-Pacific South general manager at InfoPrint Solutions, said privacy will play “a very big role” in driving the adoption of precision marketing, which is the customization of marketing messages to fit individual customers.

“Based on the privacy level requested by the customers, precision marketing will allow business rules to be defined very clearly and all channels of communications to the customers can be controlled,” Vaidya said.

He noted that customers are more likely to follow up on a marketing offer if it is relevant to them.

Such targeted marketing are best suited for business-to-consumer (B2C) companies, which in the course of their business are able to to accumulate a fair amount of data on their customers and map their behaviors, he explained. B2C companies are typically from industries such as telecommunication, banking, hospitality and insurance, he added.

Vaidya noted that while the concept of direct marketing has been around for many years, it never really caught on due to the effort businesses will have to invest to integrate software and services, in order to achieve the desired results.

In addition, companies will need business intelligence or business analytic tools to profile customers, he said. Some also lack sufficient understanding of business processes, IT infrastructure, domain knowledge and the right tools to manage such marketing campaigns, he added.

Within the organization, conflict may further arise over which department should be responsible for the cost of acquiring and maintaining such tools, he said, noting that this can prove challenging.

“The marketing team believes it is the IT department that has to invest, while the IT department thinks it should come from the marketing budget,” he said.

Uniformed marketing for mobile devices
According to Vaidya, the emergence of mobile devices such as smartphones and tablets presents a unique opportunity for companies. He explained that these devices are personalized and allow companies to talk to customers on a one-on-one basis.

Enterprises should take note that customers want a uniformed user experience when accessing content sent by a company, he said. For instance, customers will be confused if the physical copy of their bill is not presented in the same format as the copy that is accessible online, he noted.

Market players such as InfoPrint are looking to provide tools designed to help companies address such issues and deliver cnosistent marketing messages. For example, Vaidya said his company’s Advanced Function Presentation Architecture can repurpose electronic documents so that the look-and-feel of the output–whether it is a printed copy or an electronic copy–looks the same on any device.

HP replaces four board members

Just a few months removed from the Mark Hurd scandal, Hewlett-Packard’s board of directors is getting a makeover.

HP said Friday that it is replacing four board members and adding an additional seat. Out are Joel Hyatt, John Joyce, Robert Ryan, and Lucille Salhany.

In are newcomers Shumeet Banerji, CEO of Booz & Company; Gary Reiner, former CIO at GE; Patricia Russo, former CEO of Alcatel-Lucent; Dominique Senequier, CEO of AXA Private Equity; and Meg Whitman, former president and CEO of eBay and recent California gubernatorial candidate. That brings the HP board seat count to 13, up from 12.

All five new directors also will stand for re-election at HP’s next annual meeting in March.

“The addition of these new directors will further diversify the outstanding talents and wide-ranging experience that our directors already bring to HP,” Ray Lane, HP’s non-executive chairman of the board of directors, said in a statement.

Lane also thanked the four retiring members, noting that they “worked tirelessly and effectively to navigate HP through a difficult leadership change in the last six months.”

Former lead independent director of the board Ryan called it “a great privilege to serve on the HP board and see this outstanding company build on its legacy as a technology leader and innovator.” He also expressed confidence in new CEO Leo Apotheker and Lane.

“HP has a strong leadership team in place to continue moving the company forward,” he said.

The timing of the replacement seems tied to an investigation HP is ready to start into the circumstances surrounding former CEO Hurd’s resignation from the company. Hurd, who is now president of HP rival Oracle, resigned as chief executive in August after sexual harassment allegations led to an inquiry that found he had misreported his expenses to the company.

Thursday night, it was reported that HP wants this investigation to be “independent” and led by a committee of outside attorneys and board members who joined the Silicon Valley giant after Hurd’s departure. As of last night, that meant only two board members qualified: Apotheker and Lane.

The new slate of directors would mean all of them could qualify to participate in the investigation. The remaining six incumbents would not: Marc Andreessen, Lawrence T. Babbio Jr., Sari M. Baldauf, Rajiv L. Gupta, John H. Hammergren, and G. Kennedy Thompson.

Adding a handful of new faces is also a way for Apotheker, who’s still in the process of making himself at home at HP, to add a some new blood and perhaps sever some old alliances. Until today, some of the directors were approaching a decade on the board. Salhany was named a director in 2002, Ryan in 2004, and Joyce and Hyatt in 2007. The longest-serving remaining incumbents have been on the board since 2005, when Hurd first came to HP.

In an interview on CNBC today, Lane said the departures were “voluntary” and unrelated to Hurd’s ousting last summer.

The new board members won’t have much time to get comfortable in their new seats before jumping into action. Besides its own investigation, HP is facing shareholder lawsuits over the severance package Hurd received upon his departure. The Securities and Exchange Commission is also poking around, asking questions about Hurd’s alleged revelation of an impending purchase of Electronic Data Systems to a former contractor months before it was announced to the public.

This article was first published as a blog post on CNET News.

HP proposes new probe into Hurd’s departure

Hewlett-Packard is ready to launch an “independent” investigation into former CEO Mark Hurd’s departure from the company.

The probe would investigate the circumstances of Hurd’s resignation from HP and his separation agreement with the company, according to a Jan. 14 court filing in U.S. District Court for Northern California. The filing is in response to a shareholder lawsuit that claimed HP wasted corporate assets on an “unreasonable and grossly excessive severance award upon his resignation.” HP awarded Hurd a compensation package valued at about US$35 million at the time of his resignation.

HP proposes the probe would be led by a committee of outside attorneys and board members who joined the Silicon Valley giant after Hurd’s departure. Hurd, who is now president of HP rival Oracle, resigned as chief executive in August 2010 after sexual harassment allegations led to an inquiry that found he had misreported his expenses to the company.

As The Wall Street Journal noted, the only two board members who qualify under that condition are CEO Leo Apotheker, a recent target of scorn from Oracle CEO Larry Ellison, and chairman Ray Lane, who is a former Oracle president.

The scandal surrounding Hurd’s departure has also reportedly attracted the attention of the U.S. Securities and Exchange Commission. The SEC is reportedly examining allegations that Hurd passed valuable information about HP’s pending acquisition of Electronic Data Systems (EDS) several months before the deal was made public. The person Hurd is said to have told about the EDS purchase is Jodie Fisher, the former marketing contractor who accused Hurd of sexual harassment.

HP officially announced its intent to acquire EDS for US$13.9 billion in May 2008.

During a previous HP investigation, board of directors felt that Hurd’s settlement of a sexual harassment claim impeded its probe into allegations against its former chief executive’s behavior. Hurd settled with Fisher on Aug. 5, 2010, and the board announced his resignation from the helm of the tech giant the next day, concluding that while Hurd had not violated the company’s sexual harassment policy, his conduct “exhibited a profound lack of judgment”.

HP representatives declined to comment on the proposed probe.

This article was first published as a blog post on CNET News.

Mobile cloud services to emerge in 2011

SINGAPORE–As mobile device adoption looks set for “tremendous growth” in the coming decade, carriers and third-party vendors are expected to ride this wave toward mobile cloud services that provide security and additional compute capabilities, a Frost & Sullivan executive stated.

According to Nitin Bhat, partner at research house Frost & Sullivan Asia-Pacific, the world is becoming more Web-connected than ever before, and will drive the number of connected devices sold globally from 6 billion in 2011 to 80 billion in 2020. Connected devices include smartphones, tablets, televisions and smart grids, Bhat said during a media briefing here Thursday to reveal the research firm’s 2011 ICT predictions.

The analyst went on to note that in terms of smartphones sales, the Asia-Pacific region will experience a jump from 50 million devices sold to 100 million in 2011. This figure will account for 20 percent of total mobile devices shipped across the region this year, he added.

The increased adoption of Web-enabled mobile devices would, in turn, lead to the emergence of mobile cloud services revolving around mobile security and additional compute capabilities for smartphones, he predicted.

Bhat explained: “As more people use smartphones and tablets, there will be more viruses that would be aimed at these devices. There are already viruses for Apple’s iOS and Google’s Android platforms and through SMS [short message service], and we’re expecting the first signs of malware for tablets to emerge this year.”

To respond to these threats, many third-party vendors are already offering remote security services such as remote wipes, though, mainly to enterprise customers, he said. Asia-Pacific carriers, however, are still slow to capitalize on this trend and provide these services to their customer base, he noted.

That said, Bhat predicted that carriers are likely to enhance existing smartphone capabilities, which are currently “limited”, through the cloud. These include increasing the device’s memory capacity and processing speed, he said.

“Rich communications” come to fore
Besides new cloud services, Bhat noted that “richer communications” and the shift to mobile computing will have the biggest impact on the enterprise market. The analyst defined “rich” communications as “communication technologies that help enable and enhance existing business processes”.

Elaborating, he said such technologies would include video, VoIP (voice over Internet Protocol) and social networking features. These technologies will, in turn, be used to augment existing corporate collaboration tools such as wikis and blogs, he added.

He cited video as one that has already taken off among consumers, with video streaming taking up more than 40 percent of today’s mobile bandwidth, and he expects this phenomenon to translate itself into the business arena, too.

Bhat said: “Richer communications are likely to gain rapid adoption among companies, which would change the enterprise communication paradigm.”

As for mobile computing, the analyst noted that portable PCs, which refer to tablets, netbooks and notebooks, have already overtaken desktops in the global PC sales in 2010. Portable PCs currently account for 61 percent of the PC market, while desktops clock in at 39 percent. This gap is expected to grow further in 2014 with portable PCs taking up 75 percent and desktops making up the rest of the market, he said.

With regard to tablet devices, Bhat said shipments will hit approximately 15 to 17 million devices in 2011.

He noted that Apple currently holds majority market share with its iPad tablet, but its market share will eventually be chipped away by other tablet makers, such as Dell Computer, Samsung, NEC and Toshiba, as their devices enter the market.

In an earlier report, Yankee Group predicted that global tablet revenues will rise from US$16 billion in 2010 to US$46 billion in 2014. The market analyst added that the Asia-Pacific region will eventually dethrone current market leader North America to dominate tablet revenues, accounting for 58 percent of worldwide sales revenues in 2014.

BP: Renewable energy to outpace growth of oil

Given how many variables are involved, predicting the future of energy with accuracy is difficult. But BP’s annual Energy Outlook, which came out on Wednesday, is a closely watched indicator for the state of the energy industry.

The BP Energy Outlook 2030 forecasts energy sources will diversify more in the future, with a bigger role for renewable, nuclear, and hydropower. Demand will continue to grow around the world, with developing countries consuming a larger share of energy.

Energy growth was mostly met with increased use of fossil fuels over the last 20 years. In the next 20 years, BP expects that solar, wind, geothermal, and biofuels will contribute a higher percentage–an 18 percent contribution to energy growth from 2010 to 2030, compared to 5 percent of energy growth from 1990 to 2010.

BP also forecast what portion renewables will play in primary energy–that is, energy sources before they are converted to a usable form such as electricity or liquid fuels. It predicts that renewable energy will go from less than 2 percent of primary energy use now to more than 6 percent in 2030.

One of the assumptions in BP’s projections is that energy efficiency will improve significantly, particularly in OECD (Organisation for Economic Co-operation and Development) countries, and that governments around the world will adopt regulations to limit greenhouse gas emissions. But BP Group Chief Executive Bob Dudley said that BP, which advocates a way to put a price on carbon, is not optimistic about policy movement.

“Our base case assumes that countries continue to make some progress on addressing climate change, based on the current and expected level of political commitment. But overall, for me personally, it is a wake-up call,” he said in a statement.

The BP projection assumes continued economic growing, leading to primary energy growing by 1.7 percent per year, or nearly 40 percent over the next 20 years, with much of that growth coming from non-OECD countries.

Among fossil fuels, BP expects that natural gas use will grow faster than coal and oil, which it says reached peak demand in 2005 in OECD countries. Higher efficiency in transportation will contribute to slow growth of oil use, while BP expects that biofuels will represent 6 percent of liquid fuels in 2030.

This article was first published as a blog post on CNET News.

IBM delivers big earnings in fourth quarter

IBM on Tuesday reported better-than-expected fourth quarter earnings across the board led by software and hardware system sales.

The company reported fourth quarter net income of US$5.3 billion, or US$4.18 a share, on revenue of US$29 billion, up 7 percent from a year ago. Wall Street was looking for earnings of US$4.08 a share on revenue of US$28.3 billion for the fourth quarter.

In a statement, IBM CEO Sam Palmisano said the company has shifted to its “high-value businesses“. That statement reflects how software is becoming an increasingly large chunk of IBM’s revenue. IBM also reiterated that it will have operating earnings of at least US$20 a share in 2015.

Read more of “IBM delivers big earnings in fourth quarter, upbeat about 2011” at ZDNet.

Apple posts record revenue, earnings for Q1 2011

In a display of perfect timing, Apple blew past analyst expectations in reporting the best financial performance in its history today.

Apple reported revenue of US$26.74 billion and profits of US$6 billion, or US$6.43 per share. Revenue was up 71 percent from a year ago, and earnings were up 78 percent. Analysts were expecting revenue of US$24.38 billion and earnings per share of US$5.38.

The company’s gross margins dipped slightly to 38.5 percent compared with 40.9 percent a year ago, as Apple had forecast during the company’s last earnings call.

The report followed news yesterday that CEO Steve Jobs will be taking an indefinite leave of absence from the company to focus on his ongoing health problems. He retains CEO duties, while COO Tim Cook will handle the day-to-day operations of the company. Apple included a quote from Jobs in the press release accompanying the earnings report today.

“We had a phenomenal holiday quarter with record Mac, iPhone, and iPad sales,” Jobs said. “We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”

Apple shares opened down more than US$20 this morning in the aftermath of Monday’s revelation that Jobs would be taking a medical leave of absence. They rebounded to close down $7.83 at $340.65, and Wall Street responded warmly to the blow-out earnings report, sending shares up almost 2 percent to $342.07 in after-hours trading.

Apple said it sold 4.13 million Macs during the quarter, 23 percent more than the holiday quarter a year ago; 16.24 million iPhones, 86 percent better than a year ago; 19.45 million iPods during the quarter, down 7 percent from a year ago; and 7.33 million iPads.

Apple continued to put away cash, adding $9.8 billion during the quarter, putting its bank account balance at more than $60 billion.

Sales of the iPhone more than doubled from last year. CFO Peter Oppenheimer said on an earnings call with analysts that the company recorded $10.47 billion in revenue alone from the sale of iPhones and related accessories.

In its first holiday quarter, Apple was able to increase its supply of iPads, which had been problematic for the company since its debut in stores in April.

“We increased dramatically last quarter,” Cook said. “That did get us into supply/demand balance and allowed us to expand to a total of 46 countires during the quarter and we’re confident enough to add another 15 countries during January.”

Oppenheimer said the company made $4.61 billion in revenue alone from the sale of iPad and iPad accessories.

Continuing close to where Jobs left off during the previous quarter’s earnings call, Cook said he foresees little competition from Android tablets, especially the current crop that’s shipping with versions of Android not optimized for tablets.

In that case, “You wind up with a scaled-up smartphone, which is a bizarre product in our view. It’s hard for me to understand if somebody does a side-by-side (comparison) with an iPad, I think an enormous percentage of people are going to select an iPad. Those are not tablets we have any concern on,” he said.

Cook is similarly unimpressed with the forthcoming Android 3.0 Honeycomb-based tablets announced earlier this month at CES.

“There’s nothing shipping yet, so I don’t know. Generally they lack performance specs, price, (shipping) timing. Today, they’re vapor,” said Cook. “We’ll assess them as they come out. However, we’re not sitting still. And we have a huge first mover advantage. We have an incredible user experience from iTunes to the App Store and enormous number of apps and a huge ecosystem, so we’re very, very confident in entering in a fight with anyone.”

When asked about whether the iPad is cannibalizing Mac sales, Cook said he assumes it is somewhat. But he added that he’s confident that the “halo effect” that brought new Mac users to Apple once the iPod went mainstream would be repeated with the iPad.

“If the iPad or tablets do cannibalize the PC market, keep in mind we have low share in the PC market. The other guys will lose a lot more (share), and we have a lot more to win because of that,” he said. “Cannibalization is not something we’re spending one minute on here.”

Apple’s retail stores had their best quarter yet during the holiday shopping season, with revenue of US$3.9 billion. Collectively, Apple Stores in China are the highest trafficked stores and have the highest average revenue of any of the company’s retail outlets, according to Oppenheimer.

Though not asked directly, Cook subtly tried to quell any unspoken concerns analysts had over a possible future of Apple without Jobs during the call. His message was essentially “business as usual”.

“We’re very heavy with product pipeline. The team here has an unparalleled depth and breadth with talent and a culture of innovation that Steve has driven in the company,” said Cook. “Excellence has become a habit. We feel very confident in the future of the company.”

This article was first published as a blog post on CNET News.

With medical leave, more questions about Jobs’ successor

Though Steve Jobs’ presence at Apple is almost universally regarded as essential to the company’s long run of amazing success, we’ve seen that–in small doses, at least–it can do pretty well without him.

Back-to-back blowout quarters in early 2009, a successful iPhone 3GS launch, and the finishing touches on a new iPhone OS, Mac OS, and new lineup of iPods all took place while Jobs stepped away from the company for six months beginning in January 2009 to get a liver transplant.

The man credited for making Jobs’ absence minimally felt was Chief Operating Officer Tim Cook.

In an e-mail to employees today announcing an indeterminate break to focus on his health, Jobs has again tapped the same man to take the reins for him temporarily. While Jobs is gone, Cook will handle the day-to-day duties of running Apple–which is what he basically does anyway–that will in all likelihood make the adjustment inside the company very small. Jobs is the founder, the visionary, the public face of the company. (In today’s e-mail, Jobs said that he would be involved in strategic decisions during his leave.) Cook is the one who makes sure Jobs’ very specific, detailed, often grandiose, and always secret visions for consumer technology are turned into products that people want to buy and that continue to add to the company’s sizeable cash pile.

Tim Cook did a good enough job covering for Steve for his leave of absence in 2009 to the point that Apple recognized that with a bonus,” Gartner analyst Carolina Milanesi said today. “I think this speaks of how pleased the company was with his work. There is a lot of respect for Tim Cook internally at Apple and externally and he has proved to be able to drive the company well.”

But the next obvious question then becomes, is this the person who could, if called upon, take over entirely for Jobs someday? While Cook has the full confidence of his boss and has demonstrated an ability to execute on Jobs’ big-picture plans already in place, it’s the the long-term prognosis for the eventual reality of an Apple without Jobs that makes investors nervous.

Cook focuses on the nuts and bolts of operations, like cost management, supply chain, and sales. He very likely does not sit up late obsessing over concept designs, natural user interfaces for computers, how technology and liberal arts are intersecting, or envisioning the next move by Google, Amazon, or Research In Motion. That’s what makes Jobs who he is and Apple what it is.

And that is what gives investors pause when considering how Cook or anyone else will take over for Jobs someday.

“I think it’s more of a longer-term question,” DisplaySearch analyst Richard Shim said. “There’s a lot of indication that Apple is set up for the future. They have a lot of talented personalities. The problem is that all these talented people report to one of the most charismatic and influential guys in technology.”

How good they are as a group–that can only be determined over a long stretch of time without Jobs in the mix. Besides Cook, that group includes Phil Schiller, the head of marketing, who hones Apple’s sales pitch; CFO Peter Oppenheimer who manages Apple’s bottom line; Jobs’ design guru, Jonathan Ive; the senior vice president of Apple’s vast retail operation, Ron Johnson; and the men who head up hardware engineering (Bob Mansfield) and software engineering, (Bertrand Serlet).

In the near term, some Apple investors may want to take a break while Jobs is out, Greg Taylor, a money manager at Aurion Capital Management in Toronto, told Businessweek. Jobs did not say how long he would be away, and it’s not clear that Cook–or anyone else off the bench–can replicate what Jobs does, putting Apple far ahead in what consumers want from tech products.

“As much as any company has been associated with one person, it’s Apple,” Taylor told the magazine. “He has portrayed himself as the guiding light behind the company and one of its key innovators. The fact that Steve Jobs is taking some time off could be enough of a concern that people want to take some money off the table ahead of this quarter.”

Wall Street will likely react negatively tomorrow when the stock market opens following today’s public holiday.

Tomorrow is also the day that Apple is due to report its fiscal first quarter 2011 earnings, after the close of trading on Wall Street. Investors will have opportunity to ask Cook and other executives about what Jobs’ specific health concerns are now, and when he will return. If it’s anything like last time, Apple probably won’t take many questions on the matter.

But Cook’s recurring prominence at major Apple events, his solo turn as the face of Apple at the high-profile New York City introduction of the Verizon iPhone last week, and his by-now familiar and calming southern drawl on earnings calls should also serve to make him a reassuring presence for investors who could somewhat dampen the blow to their confidence in Apple’s immediate future.

This article was first published as a blog post on CNET News.

Apple CEO Steve Jobs to take medical leave again

Apple’s Steve Jobs will be taking a medical leave of absence for the second time in two years but will remain CEO of the company, involved in strategic decision-making.

Chief Operating Officer Tim Cook will assume responsibility for the company’s day-to-day operations, amid continuing investor concerns over Apple’s plans for eventual transition in the corner office.

The stock market is closed today for a federal holiday. Apple is scheduled to report its first-quarter fiscal 2011 earnings tomorrow after 1 p.m. PT.

Jobs, a pancreatic cancer survivor, took a leave in the first half of 2009 to deal with issues related to his medical treatments. In announcing that hiatus, he said he would step away for six months, and he returned to full-time work on schedule.

This time around, the 55-year-old Jobs did not give a timeframe for his return. Here’s the text of his e-mail to employees, provided by Apple this morning:

Team,At my request, the board of directors has granted me a medical leave of absence so I can focus on my health. I will continue as CEO and be involved in major strategic decisions for the company.

I have asked Tim Cook to be responsible for all of Apple’s day to day operations. I have great confidence that Tim and the rest of the executive management team will do a terrific job executing the exciting plans we have in place for 2011.

I love Apple so much and hope to be back as soon as I can. In the meantime, my family and I would deeply appreciate respect for our privacy.

Steve

In January 2009, Jobs said that he was suffering from a hormone imbalance that was impeding his body’s ability to absorb certain proteins. In April of that year, Jobs underwent liver transplant surgery, and he returned to work by early July. Cook was the one to step in to run the day-to-day operations of the company during that leave as well, guiding the company through the launch of the iPhone 3GS, as well as some of the final stages of the production of the iPad.

In the months preceding that announcement two years ago, Jobs’ health had been the topic of intense speculation. In an appearance at the company’s 2008 Worldwide Developers Conference, Jobs appeared to have lost a considerable of weight. Apple and Jobs rebuffed any questions on the matter, calling his health a “private matter”.

No such speculation led up to today’s announcement. Jobs has made regular appearances in support of new Apple products, most recently at an October event introducing the latest MacBook Air and Mac OS X Lion. He was supposed to appear at an event in San Francisco this week with Rupert Murdoch to announce the launch of The Daily, an iPad-only newspaper, but the event was rescheduled late last week.

Though his immediate health was no longer a major focal point with the press or the public, the topic of who will take over for Jobs at Apple remains a hot one with investors. Many investors feel that Jobs can never truly be replaced as CEO, since his vision and persona are so fundamentally linked with the company, but Apple has been criticized for not publicly grooming a successor.

Just recently it came to light that Apple’s board of directors had fielded a stockholder request that Apple make its succession plan public knowledge. Apple refused, saying that privately there is an established a plan in place and that disclosing it to the public and competitors would damage the company’s ability to retain and recruit top executive talent.

From the mid-1980s to the mid-1990s, Jobs was absent from Apple after a conflict with the board over leadership style. Since his return to Apple in 1997, Jobs has rebuilt the company he co-founded with Steve Wozniak, taking it from near bankruptcy to the most influential consumer electronics company in the world. With more than US$50 billion in the bank, Apple now has the second-highest market capitalization in the world, behind ExxonMobil. Beyond the Mac lineup of desktops and laptops, Jobs has transitioned the company into the entertainment business with iTunes and the iPod, and into a leading mobile phone maker with the iPhone. Last year, Apple introduced the touch-screen iPad, which has created a third mobile device category and a success that all of Apple’s competitors have recently flocked to try to reproduce.

Cook capably handled the reins during Jobs’ 2009 leave of absence. While Jobs was away, Apple delivered two back-to-back blow-out quarters, as well as an updated iPhone OS and new iPhone hardware. Under Cook, Apple also put the finishing touches on the company’s new iPods, MacBooks, and Mac OS, which were released shortly after Jobs’ return to the helm in late June.

He was rewarded handsomely for keeping Apple on track, getting a bonus of US$5 million plus 75,000 stock options for his work filling in for Jobs. He is Jobs’ most trusted executive, handling all earnings calls with Wall Street investors and analysts for the last few years, and has had an increasingly larger role at major product introductions. Cook most recently appeared on behalf of Apple last week alongside Verizon executives in New York City to announce the first iPhone that works on Verizon’s network.

Cook, 50, joined Apple in 1998 and was promoted to COO in 2004. It was at Cook’s behest that Apple pulled out of building its own products and moved to contract manufacturers like Foxconn and others, reducing the company’s inventory and drastically improving its margins.

This article was first published as a blog post on CNET News.

Report: Apple nixes free iPad subs for print customers

Apple is reportedly on the verge of launching a subscription service for paid apps, and the company appears to be ironing out some final details with publishers who plan to participate.

A number of European newspaper and magazine publishers have been contacted by Apple and informed that they cannot offer free subscriptions for iPad editions through the upcoming service to customers already paying for a print version of their publication, according to a report in Dutch newspaper De Volkskrant. In other words, once this subscription service finally launches, don’t be surprised if your favorite magazine does an iPad edition and you have to pay for it again.

The report says this will go into effect after Apr. 1. The Belgian, Flemish, and Dutch publications quoted sound none too pleased. They’re also unhappy that subscribers will have to go through Apple to sign up for any iPad-edition publications.

Those gripes aren’t new: the Financial Times said early last year its own discussions with Apple on the topic nearly fell apart over the issue of who owns the subscriber records, Apple or the publication.

Apple has reportedly been working on such a digital subscription service for its mobile devices for more than a year. Many expected Apple to announce the service with the introduction of the iPad in January 2010. Instead, Apple only announced partnerships with book publishers who would sell books through Apple’s iBooks store.

The service was scheduled to launch next Wednesday, but as of last week has been delayed again for several weeks. Its official unveiling is set to coincide with the introduction of News Corp.’s The Daily, an iPad-only newspaper. The event will be held in San Francisco and Apple CEO Steve Jobs is scheduled to take the stage with News Corp. chairman Rupert Murdoch.

This article was first published as a blog post on CNET News.

Bye-bye, physical media? Sony closes CD plant

Sony Corp., the company that brought us the Walkman and the parent company of music label Sony Music Entertainment, plans to shut down a CD-manufacturing plant in southern New Jersey in March.

About 300 employees will be laid off once the 50-year-old Sony DADC plant in Pitman, N.J., is closed. Sony said it plans to shift CD-making operations to a facility in Indiana. The company moved DVD manufacturing from the plant about a year ago.

Lisa Gephardt, a Sony spokeswoman said in a statement: “In light of the current economic environment and challenges facing the physical media industry, Sony DADC is taking additional steps to reduce cost from our supply chain network in order to remain competitive.”

Who couldn’t see these kinds of closures coming? The music CD has become nearly a relic. The emergence of digital music and music players, as well as the rise of illegal file sharing, helped to hasten the demise of the CD as the main music distribution format.

According to Nielsen SoundScan, U.S. music sales fell 2.4 percent last year and digital track sales grew only 1 percent to 1.17 billion. But CD sales fared far worse. When it came to albums, sales of both newer CDs and catalog titles dropped by 16 percent and 23 percent respectively–these two categories also saw double-digit losses the previous year, according to the Los Angeles Times.

The CD was a boon for the record industry. Not only did record labels cash in when music buyers replaced their cassette tapes and vinyl records with discs, but the CD also helped prevent unauthorized copying–at least initially. CDs also discouraged people from buying singles, prompting them to purchase full albums instead.

The plant closure is just another sign that physical media’s days are numbered. In addition to music, the film and book industries are amid their own digital transformations. Netflix and Apple are helping to fuel the emergence of Web TV. The Kindle and iPad are helping to drive consumer interest in e-books. How far this goes is anybody’s guess but one has to wonder how long printed books and DVDs will be with us.

This article was first published as a blog post on CNET News.

Asian governments eye prudence amid higher IT budgets

Governments across the Asia-Pacific region, excluding Japan, are expected to increase ICT spending this year but will remain cost-conscious, focusing on investments that will offer the best returns.

According to an IDC report released Wednesday, 2011 technology budgets in the region’s public sector is expected to grow 7.1 percent over last year to US$34.8 billion.

However, government administrations will continue to focus on cost management, and demand products and services that provide the best bang for the buck, the research firm noted.

It added that Asia-Pacific governments will invest in four areas focusing on operational efficiency, business-IT alignment, risk management and citizen-centricity.

In line with these, governments will place more emphasis on the adoption of private clouds over public clouds as the former avail flexibility and scalability without compromising security, availability and reliability, predicted IDC.

In addition, to improve interaction with citizens, the public sector will look to incorporate social analytics into the decision-making process and Web 2.0 engagements.

Boosting technology clusters
According to IDC, various economic stimulus packages introduced over the last few years brought about notable transformations in the region’s ICT landscape. These economies have become more open to spur ideas and tap relevant expertise.

“To cope with progressively more borderless and collaborative business environments, Asia-Pacific public sector organizations need to achieve functional ICT integration and operational transformation agility,” Gerald Wang, senior market analyst at IDC’s Government Insights Asia-Pacific, said in the statement.

To that end, governments in the region will increasingly work on “the soft and hard national infrastructure to create sustainable cities”, said IDC. This includes amassing knowledge in the form of building up universities and research laboratories, attracting venture capital dollars and talent, and empowering local institutions with capabilities to enforce intellectual property rights.

As part of the drive toward sustainable growth, Asia-Pacific governments will also focus on IT insourcing, with some bringing offshore work back into their own jurisdictions, the analyst firm noted.

According to IDC, the top three fastest growing markets in the region, in terms of public sector ICT expenditure between 2011 and 2014, will be Indonesia, India and Vietnam. All three countries are expected to achieve a double-digit compound annual growth rate over five years.

Asia to lead retail banking IT spend

The Asia-Pacific region will see the biggest increase worldwide in spending on retail banking technology by 2015, growing 49 percent to hit US$28.1 billion, revealed a new study.

In a report released Wednesday, research firm Ovum said the bulk of investments will be pumped into areas that save cost and improve customer service such as online and mobile banking. With Asia-Pacific leading the pack, global expenditure on retail banking technology will total US$132 billion in 2015, marking a 24 percent growth over the next five years.

Within the region, Japan will account for the largest share at US$9 billion in 2015, Ovum noted. The remaining countries predicted to make the top five are China at US$7.8 billion, India (US$2.7 billion), Australia (US$2.7 billion), and South Korea (US$1.5billion). Singapore’s retail bank sector will hit US$427 million, according to the research house.

Jaroslaw Knapik, Ovum’s senior analyst noted in the report that China and India will see the fastest growth rates.

The increase in technology spend as banks set up new branches in less-saturated markets across the region will drive the growth of emerging markets, Knapik explained. According to Ovum, branch tech spending in emergent Asia will jump 53 percent to reach US$1.9 billion within the next five years.

Online, mobile banking
The research firm stated that the surge in investments will be fuelled by the banking industry’s need to grow revenues and improve customer trust. This would explain the heavier spending on areas such as online and mobile banking, technology in branches in emerging markets including China and India, and channel integration, it noted.

It added that investments in Internet banking will grow 39 percent from 2010 to 2015 to hit US$1.8 billion.

Knapik said banks will be pumping money into online platforms, extending into mobile devices and tablets because these can help service clients at a lower cost.

Investments will also be poured into technologies that allow “smarter” selling and servicing, such as customer analytics and channel integration, he said.

The Ovum analyst highlighted that as banks face ever-increasing regulatory requirements, they will be driven to invest in technologies that help them reduce costs, such as data management, business intelligence and analytics.

Over the next five years, spending on mid-office components such as risk management, anti-fraud, compliance and performance management based on cost-efficient technologies, will grow by 51 percent to hit US$650 million in emerging Asia-Pacific markets, and by 28 percent to reach US$1.1 billion in developed economies in the region, Ovum estimated.

MySpace CEO confirms heavy layoffs

MySpace CEO Mike Jones Tuesday announced a “significant organizational restructuring that will result in a 47 percent staff reduction across all divisions globally and impact about 500 employees,” confirming many rumors that the News Corp.-owned social network would be going through heavy layoffs before possibly seeking a new buyer.

Formerly a social-networking sensation, MySpace lost more and more ground to Facebook over the past few years until it finally underwent a massive redesign that focuses on pop culture media-sharing for young users rather than attempting to be a universally appealing social network.

“Today’s tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability,” Jones said of the recently redesigned MySpace. “These changes were purely driven by issues related to our legacy business, and in no way reflect the performance of the new product.”

The statement had some bits of slightly sunnier news: “Since the worldwide rollout of the new MySpace, there have been more than 3.3 million new profiles created,” Jones’ statement announced. (OK, but does it offset users who continue to desert the site?) “We have already seen a rise of four percent in mobile users just between November to December, now totaling over 22 million.”

Jones also announced that there will be some partnerships for MySpace in the U.K., Australia, and Germany to handle advertising sales and content, which hints that layoffs overseas may be particularly heavy. He said that the company “will retain a core, dedicated international team to work with partners in order to ensure users, content partners and advertisers continue to be served.”

There was no mention of News Corp.’s rumored plans to shop MySpace to other buyers.

This article was first published as a blog post on CNET News.

Green disconnect between Asian consumers, firms

SINGAPORE–Businesses in Asia significantly underestimate consumers’ interest and willingness to dig deeper into their pockets for green-certified products, and end up missing out on a huge market opportunity that will enable them to charge premiums for green goods.

These were the findings uncovered in a new survey, titled Green Gauge 2010, unveiled at a media briefing here Tuesday. Commissioned by testing and certification service consultancy, Tüv Süd Asia-Pacific, the research was conducted in Singapore, India and China between November and December last year, and compared both consumer and corporate attitudes toward green products and services and sustainability certifications across three industries, home electronics, food and beverage (F&B) and clothing and footwear.

The three market sectors were chosen because they had maximum impact on consumer-buying decisions, explained Ishan Palit, CEO of Tüv Süd Asia-Pacific, who presented the findings.

According to the study, 84 percent of consumers said they were prepared to fork out on average 27 percent more to buy green-certified products and services. However, businesses expected only 43 percent consumers to do so, paying only a premium of 14 percent for such green products.

In addition, the survey revealed that green credentials were a major influence on the purchasing decisions of consumers across all three countries. Some 96 percent of respondents in India said independent green certifications were important factors in deciding which product to buy, followed by China at 94 percent, and Singapore at 90 percent.

While 96 percent of consumers and 89 percent of enterprise respondents shared a high interest in green products and services, businesses did not appear aware of the intensity of consumer interest. Companies were also unaware of how this might translate in terms of demand for green products and the opportunity to charge premiums for consumers willing to pay for such goods.

Survey findings also demonstrated that 49 percent of consumers were aware of independent green certifications, compared to 35 percent of corporations, and recognized the need to be responsible eco-citizens. In contrast, 43 percent of corporations said it was the government’s job to drive sustainability.

Consumers more green
Overall, the Green Gauge study observed that consumers have become increasingly sophisticated with regard to green issues and embrace green products and credentials. Despite the soaring demand, businesses have been slow on the uptake.

Elaborating on the survey findings, Palit said it is clear that being green makes business sense and gives good ROI (returns on investment).

Speaking ZDNet Asia at the sidelines of the briefing, he noted that companies should not view green as a mandatory corporate responsibility or potential market opportunities could be lost. Instead, they should look at the potential ROI when they produce products in a sustainable way and feasibility of charging a premium in the market, he said.

For any strategy or service to be sustainable for a businesses, it has to make economic sense to an organization, Palit stressed, noting that green has until now, been viewed by enterprises as mainly a compulsory corporate responsibility, rather than an economic incentive.

According to the Green Gauge study, 74 percent of organizations did not have sustainability policies or guidelines or did not communicate them with their stakeholders. And if there were such policies and guidelines, such implementations were driven by industry and government regulations for 81 percent of companies in China, 67 percent in Singapore and 55 percent in India.

Palit noted that, currently, there are only push factors for companies to go green. Once the “pull” becomes apparent–in the form of consumers’ willingness to pay more for green-certified goods–the uptake from businesses would be much faster, he said.

US court won’t block antitrust suit against music labels

The U.S. Supreme Court has decided that a lawsuit, filed by a group of online music buyers who allege the four largest record companies conspired nearly a decade ago to fix prices of songs sold online, can now move forward.

The high court on Monday declined to hear an appeal by the labels–Universal Music Group (UMG), Sony Music Entertainment, Warner Music Group and EMI Group–to block the suit, according to reports by Bloomberg and Reuters. Instead, the decision by a federal appeals court that the plaintiffs had supplied enough evidence to sue the labels will stand.

The lawsuit by the music buyers alleged that the record labels agreed to set a wholesale price floor of about 70 cents per song when competitors were offering songs on the Web for less.

A spokesperson for Warner Music declined to comment. Representatives from the other labels and the Recording Industry Association of America (RIAA) did not immediately respond to interview requests.

The roots of the case can be traced to 2001, when the top labels were preparing to try their hand at selling digital music out of their own Internet stores. Bertelsmann, Warner Music and EMI had backed a service called MusicNet. Sony and UMG built Pressplay.

“All defendants signed distribution agreements with MusicNet or Pressplay,” according to the consumers’ group. “[The labels] sold music directly to consumers over the Internet through these joint ventures. Both the joint ventures and the (RIAA) provided a forum and means through which defendants could communicate about pricing, terms, and use restrictions.”

“To obtain Internet music from all major record labels, a consumer initially would have had to subscribe to both MusicNet and Pressplay at a cost of approximately US$240 per year.”

The plaintiffs also noted that the labels were investigated about four years ago by the office of the New York State attorney general regarding wholesale prices charged for digital music. The record companies were also the focus of an inquiry by the Department of Justice into possible “collusion and price fixing” and to determine whether “defendants misled DOJ about the formation and operation of MusicNet and Pressplay,” the plaintiffs added.

None of the investigations appeared to go anywhere.

In court documents, the plaintiffs accused MusicNet and Pressplay with being anticonsumer and attempting to restrict access to online music. Even after those services began selling songs, the labels required these other outlets to “only sell defendants’ music if they contracted with MusicNet to provide Internet music for the same prices and with the same restrictions as MusicNet itself or other MusicNet licensees”. “If the licensee attempted to license music from another company, defendants forced them to pay penalties or terminated their licenses.”

Apple doesn’t want to reveal CEO succession plans

Apple is once again being asked to discuss what the company would do without CEO Steve Jobs.

Apple said in last week’s regulatory filings that it was informed that Central Laborers’ Pension Fund, which owns over 11,000 shares of Apple stock, plans to submit a proposal at Apple’s annual shareholder’s meeting on February 23, that if passed would require Apple to “adopt and disclose a written and detailed succession planning policy”.

Apple’s board of directors said in the filings that it has recommended shareholders vote against the proposal. They say they have already established a succession plan and disclosing it publicly would only hurt the company’s ability to retain and recruit top executive talent. Apple wrote that competitors could poach top Apple execs who learn they aren’t in line for the top jobs or those execs might leave voluntarily.

Few leaders are as closely identified with their companies as Jobs. Some shareholders appear to get nervous anytime there’s a debate about what the company’s prospects are without him. In the event that Jobs won’t or can’t continue with his duties, some shareholders want to know how Apple would respond. Those plans haven’t been publicly disclosed.

The debate took on a greater urgency after Apple revealed that Jobs underwent a liver transplant in 2009.

As part of Central Laborers’ plan, Apple’s board would be required to “develop criteria for the CEO position which will reflect the company’s business strategy and will use a formal assessment process to evaluate candidates” as well as identify and develop top candidates from within the company. The proposal also calls for Apple to maintain nonemergency and emergency succession plans.

This article was first published as a blog post on CNET News.

Global IT spend to hit US$3.6 trillion in 2011

Global IT expenditure is expected to amount to US$3.6 trillion in 2011, driven primarily by strong end-user demand for telecom equipment, according to a new Gartner report.

Released Friday, the report noted that 2010’s worldwide IT spend grew 5.4 percent over 2009 to US$3.4 trillion. The upward trend is expected to continue, Gartner said, as it revised its forecast for 2011 from a year-on-year growth of 3.5 percent to 5.1 percent.

The positive forecast was partly driven by expected strong showings in the telecom equipment market, the report stated. Worldwide spend in this market will grow by 9.1 percent to reach US$1.65 trillion this year, as smartphone sales in mature markets and white box devices in emerging markets thrive.

Additionally, Gartner attributed currency exchange rate fluctuations to be a significant factor in the upward revision, as the forecast is based on the weakening greenback.

“Aided by favorable U.S. dollar exchange rates, global IT spending growth is expected to exceed 5 percent in 2010, but a similar level of growth, [despite our forecast], is far from certain, given continued macroeconomic uncertainty,” said Richard Gordon, research vice president at Gartner, in the report.

He added that while the global economic situation continues to improve, the recovery is “slow and hampered” by a sluggish growth outlook in the important mature economies of the United States and Western Europe. Furthermore, there are growing concerns that key emerging economies might not be able to sustain their relatively high growth rates into the new year, he pointed out.

On the other hand, Gartner believes IT will continue to flourish in these uncertain times. Gordon pointed out that IT a fundamental enabler of cost reduction and cost optimization, investment in technology is seen increasingly as an important element in business growth strategies.

“We are optimistic about continued healthy spending on IT,” he said.

Last month, IDC provided a more conservative forecast of US$1.6 trillion for global IT spend in 2011.

Software boosts Asia-Pacific showing
Gartner’s latest report revealed that the Asia-Pacific region’s end-users will contribute approximately US$652 billion of the overall IT spend in 2011. This represents a US$57 billion increase from 2010 and the research firm expects this growth in spending to continue for the next three years.

Zooming in on the figures, Gartner pointed out that software will see the biggest leap in end-user spending at 12.8 percent compared with the other categories such as computing hardware, IT services and telecom.

That said, telecom equipment continues to reign as the top area of expenditure overall in absolute terms. The sector will contribute US$460.8 billion to the region’s overall spending in 2011, which is a hike from 2010’s US$422.6 billion.

Last November, Gartner noted that Asian organizations are expected to increase their IT expenditures by 7.6 percent to US$312 billion. The rate of growth is slower than that experienced in 2010, though, where budgets rose by 10.6 percent, it said.

Salesforce buys Dimdim for US$31M, bolsters Chatter

collaboration

Salesforce.com said Thursday that it will acquire Dimdim for US$31 million in a move to add real-time communication technology to its Chatter platform.

Dimdim, founded in 2007, has presence, messaging and screen sharing technologies.  In a nutshell, Dimdim allows you to share screens, documents and communicate in meetings via a browser.

Salesforce.com said it will add to its development team with the Dimdim purchase. In many respects, Dimdim resembles Cisco’s WebEx and Citrix’s GoToMeeting. For Salesforce.com, those capabilities are a logical extension to Chatter. Salesforce.com said it will integrate Dimdim into Chatter, but has no plans to enter Web conferencing.

Read more of “Salesforce buys Dimdim for $31 million, bolsters Chatter collaboration” at ZDNet.

Skype acquiring mobile video expert Qik

Skype, a powerhouse in the area of voice and video chat over the Net, said today it’s acquiring Qik, a mobile video specialist.

The move stands to expand what Skype can mobile phones. Today it’s got apps for voice chat, but Qik brings video to the party with applications that run today on Android, iPhone, Symbian, Blackberry, and Windows Mobile.

“Together, Skype and Qik will focus on providing a richer, more integrated experience that will allow people globally to share experiences in real-time video across different platforms, as well as store those moments so they can be viewed anytime later,” Skype said in a statement.

Video chat is increasingly important as phone makers add front-facing cameras for video chat and 4G networks add at least theoretical faster data-transfer speeds. At the CES show this week, many demonstrations feature video chat–including Google’s upcoming Honeycomb version of Android with the feature apparently built in.

Apple’s newer version of iOS also enables video chat, though Qik doesn’t have an app for that platform. So although Skype has power and a strong subscriber base, it also has big competitors.

The acquisition also has ramifications for Skype’s technology assets and for moving beyond just communications.

“The acquisition of Qik helps accelerate Skype’s leadership in video by adding recording, sharing, and storing capabilities to Skype’s product portfolio. Through this acquisition, Skype will also be able to leverage the engineering expertise that is behind Qik’s Smart Streaming technology, which optimizes video transmission over wireless networks,” the companies said.

Qik, headquartered in Redwood City, Calif., has 60 employees. Terms of the deal weren’t disclosed.

This article was first published as a blog post on CNET News.

LinkedIn may go public this year, or not

The Wall Street chatter about Silicon Valley these days is all about the companies that don’t seem to want to go public–Facebook, Groupon–and instead are raising massive rounds of funding that permit extensive and far more shadowy private-market trading. But, according to Reuters, one Valley company may indeed go public soon: professional networking site LinkedIn, which the Thursday story says has already picked a bank to underwrite an IPO.

The only comment from LinkedIn is that “an IPO is just one of many tactics that we could consider.” One of the first social-media sites to claim a profitable balance sheet, LinkedIn makes money from premium services as well as from advertising that runs at notably high prices due to the site’s white-collar membership ranks (who number about 85 million).

But one of Reuters’ sources hinted that LinkedIn may push for an IPO due to pressure: If Facebook goes public, it could be such a massive event on Wall Street that it would be capable of undermining another, subsequent social-networking IPO with the sheer force of its hype. The same story also implied that social gaming company Zynga may be considering an IPO before Facebook for that reason.

Of course, Facebook investors have said that they don’t want the company to go public this year at all. But the U.S. Securities and Exchange Commission (SEC) is reportedly scrutinizing the company’s heavy amount of private-market trading out of a suspicion that Facebook may, in fact, have more than 499 individual shareholders, something that would require it to disclose its tightly-held financials. This has only gotten more tense due to Facebook’s recent US$500 million funding round led by Goldman Sachs, in which the investment bank invited wealthy clients to buy into it and was swamped with demand within days.

Should the SEC turn up the heat, a Facebook IPO could come sooner rather than later, which may be why LinkedIn could hit fast-forward as well.

This article was first published as a blog post on CNET News.

APAC sees rise in patent activity, quality

SINGAPORE–Asia-Pacific economies such as Japan, China, Taiwan and Singapore are leading the way in the submission and approval of patents from the United States Patents and Trademark Office (USPTO), indicating a rise in innovation within the region, noted a new study. However, such innovation is highly uneven across the region.

Released Thursday, the Asia-Pacific Intellectual Property (IP) Scorecard 2009 revealed that the number of patents created by Asia-Pacific economies has “risen considerably” since the mid-1990s. In 1995, for instance, patents from the region, excluding Japan, accounted for only 4 percent of the total patents granted by the USPTO, but the number has since risen to 13.3 percent in 2009.

The IP scorecard for the region is the second study released to date; the first was published in 2004.

Zooming in on the figures, Wong Poh Kam, director of the National University of Singapore’s Entrepreneurship Center, pointed out that China is a primary driver for the increase in patent activity. The country contributed 3,108 patents, or 1.6 percent of total patents worldwide, in 2009, reflecting a 36 percent growth per annum from 2005 to 2009, he noted.

Comparatively, other top patent producers in the region such as Taiwan, Singapore and Japan registered growth rates of 8.5 percent, 8 percent and 5.3 percent, respectively. The average global growth rate is 5.6 percent.

Such momentum, Wong noted, will see China overtake Japan in the next five to 10 years as the region’s top patent holder. The director was speaking at a media briefing, which was organized in conjunction with the third Global Forum on Intellectual Property (GFIP) held here.

Currently, the U.S. remains the top patent holder in the world with Japan in second place, said Wong.

Quality vs. quantity
That said, the quality of the patents reflect a different picture, Wong noted. According to him, the study used the propensity of a patent to be cited by other patents as a “crude measure” of a patent’s influence and importance, which would indicate the quality of the application. This is known as the Relative Citation Index (RCI), he added.

Under this category, Singapore outranked its Asia-Pacific peers, as it received the highest average number of citations for patents invented in the last 10 years, the scorecard indicated. China, on the other hand, dropped from seventh in 2005 to No. 10 in 2009. The study attributed its decline to a large increase in the number of patents granted and the changing composition of its patenting activities as the world’s most populous nation shifts focus to fields such as ICT.

“New patents tend to not get cited while, conversely, the longer a patent has been in existence the more it will be cited by other patents,” explained Wong. “This bias should be taken into account when looking at the RCI results.”

Singapore’s top billing is also partly because many of the patents cited belonged to well-known multinational companies operating out of Singapore, he said. As such, the technology created in Singapore is likely to be part of a bigger project being put together by the organization and these patents would be cited more often. Many of China’s new patents, though, are submitted by local companies that are lesser known and therefore unlikely to be cited as much, he noted.

Offering additional insight to China’s innovation roadmap, Peter Williamson, professor of international management at University of Cambridge’s Judge Business School, pointed to the government’s desire to move its economy away from being a low-cost manufacturing hotspot to a knowledge-based one.

A keynote speaker at the GFIP, Williamson noted in his presentation that, increasingly, China’s patent filings are shifting from electrical- and electronics-based technologies to applications focusing on “physics, mechanical engineering, chemistry and metallurgy”, among others.

His observation corresponds with the government’s stance. According to a national document titled “National Patent Development Strategy (2011-2020)”, which was released by the State Intellectual Property Board of China in November last year, the government is looking to increase its annual patent filings to two million by 2015.

The document, translated by the USPTO, also stated: “[By 2015,] China will rank among the top two in the world in terms of the annual number of patents for inventions granted to the domestic applicants, and the quality of patents filed will further improve.”

Further proof of China’s move towards a knowledge-based economy came from a Financial Times report Wednesday. The article stated that in 2008, Huawei, a Chinese telecoms equipment and service provider, registered more patents than any other company, citing figures provided by the World Intellectual Property Organization (WIPO). In 2010, the Chinese company was second only to Japan’s Panasonic in terms of patents filed, it added.

Microsoft plans new Windows operating system for mobile devices

Microsoft-plans

Microsoft is working on a new Windows system for mobile devices like tablet computers, according to reports.

The system would focus on devices using energy-saving chips designed by the British company ARM. Many of ARM’s chips are currently used in both the iPad and iPhone from Apple.

Now Windows will reportedly offer versions of its Windows CE and Windows Phone 7 systems that run on ARM chips. Its standard Desktop Windows system will be designed for x-86 architecture chips from Intel and AMD .

Microsoft head Steve Ballmer is expected to present the new systems in January at the Consumer Electronics Show in Las Vegas. The new systems should support chips from both ARM, Intel and AMD. Quallcomm, Texas Instruments and Samsung all produce chips with ARM designs.

Microsoft competitor Apple currently dominates the tablet computer market, selling 7.5 million of its iPads between its debut in April and the end of September. Market researcher Strategy Analytics estimates that Apple currently holds 95 per cent of the tablet computer market.

However, tablet computers running Google’s Android operating system are expected to eat into that lead in the near future.

An alliance with ARM could help Microsoft catch up in the mobile devices market. Microsoft official Achim Berg has noted that, since the introduction of its smartphone software, Windows Phone 7, 1.5 million Windows mobiles have been sold, meeting expectations.

Scientist sets Large Hadron Collider data to ‘music’

Scientist sets Large Hadron Collider data to 'music'

Scientists working at the Large Hadron Collider (LHC), the world’s biggest particle smasher, have turned masses of data produced by the collider into sound for the first time.

More than 40 million pieces of data are processed by the LHC every second as it seeks to prove the existence of particles such as the Higgs boson, which researchers believe endows everything in the universe with mass.

Until now the LHC, which lies deep in a 17 mile-long tunnel beneath the border between France and Switzerland, has produced colourful images as it produces the data.

This has taken the form of spraying coloured particles in different directions, the Daily Mail reports.

But physicist Lily Asquith, who until recently worked with the LHC at CERN, the European Organisation For Nuclear Research, wanted to be able to ‘hear’ the particles as well.

So, she used music comparison software to turn data from the collider into sound, thereby giving it another dimension.

“You tend to personify things that you think about a lot,” she told radio station NPR. “I think electrons, perhaps, sound like a glockenspiel to me.”

“It’s quite easy… to consider that there could be some kind of sound associated with these things,” she said, according to a CERN statement.

Asquith fed in a sample – three columns of numbers – of the LHC data into the software.

As a beam of particles is shot through the collider, three data points are collected and mapped to sound parameters – the particle travelling away from the internal beam becomes the sound’s pitch, the amount of energy of a particle is transformed into volume, and the timing of the notes shows how far the particle travels.

Asquith explained: “So we’ll map, for example, the first column of numbers, which may be a distance, to time.”

“And we may map the second column of numbers to pitch, and the third, perhaps, to volume.”

While the sounds that emerge might not be described as music, they would certainly appeal to avant garde fans.

StarHub snags S’pore IR communications deal

StarHub has inked a multi-year, multi-million dollar deal to equip Singapore’s second integrated resort (IR), the Marina Bay Sands (MBS), with ICT capabilities.

The telco will provide MBS mobile voice and data services, high-speed Internet connectivity, pay TV and enterprise messaging, it said in a statement on Wednesday.

The exact terms of the partnership could not be disclosed due to confidentiality clauses, ZDNet Asia understands from a StarHub spokesperson.

The contract covers the Sands Expo and Convention Centre and MBS’ hotel rooms and suites; however, the pay TV services will be available at 75 public screens around the IR, including the casino. MBS, which officially opened on Jun. 23, has 2,560 hotel rooms and suites, while its convention facility has a floor area of 120,000 square meters.

StarHub rival SingTel is the official provider of similar services to Singapore’s first IR, Resorts World Sentosa. The seven-year partnership, announced in November 2009, is worth S$21 million (US$16.2 million).

Groupon raising US$950 million?

A financial news and research outlet called VCExperts posted an article Wednesday claiming that on Dec. 17, daily-deals broker Groupon “filed a certificate to authorize a US$950 million Series G round of preferred stock”. The exact amount that the company raised in the monster funding round should be available next week (which means it could be quite a bit less), the report continued, adding that the company’s valuation is likely US$6.4 billion.

The dollar amount sounds like something out of Dr. Evil’s machinations in the “Austin Powers” spoof film series, but Groupon isn’t denying it. The company, which reportedly turned down a multibillion-dollar acquisition bid from Google earlier this month, has declined to comment on the matter.

Where could it be going? Assuming the VCExperts report is accurate, there are a lot of possibilities. One, Groupon is a powerful moneymaker in the U.S., but critics have pointed out that its overseas business operations are lackluster, and this kind of financing could be used to bolster its international product.

Additionally, the number of “Groupon clones” out there has flagged the fact that while Groupon has a big majority of the market in e-mail based coupons and discounts, the business model is remarkably easy to replicate. The money raised could hypothetically help Groupon build stronger technology to give it a bigger advantage against smaller and more nimble competitors, something hinted at with the company’s acquisition of the Silicon Valley-based Ludic Labs earlier this month.

Or, as Groupon seems to be following the mold of companies like Facebook and Twitter in putting off an initial public offering long past the point where its late-’90s brethren might have, a gargantuan amount of funding could let early employees and investors continue to cash out on a secondary market.

This article was first posted as a blog post on CNET News.

Mark Hurd asks to intervene in HP investor suit

Former Hewlett-Packard CEO Mark Hurd petitioned a Delaware court Tuesday, Bloomberg reported, to intervene in an HP shareholders’ lawsuit over his August ouster from the company.

It’s the latest step in Hurd’s ongoing attempt to keep a document sealed that reportedly contains former HP contractor Jodie Fisher’s allegations of sexual harassment against him–the complaint that ultimately led to Hurd’s departure. The plaintiff’s side of the shareholder suit targeting HP has been seeking to make the eight-page document public.

Last week, a report surfaced that the U.S. Securities and Exchange Commission was investigating Hurd’s ouster by the company’s board of directors, an inquiry centered on the claim that Hurd, who is now serving as co-president of Oracle Software, had passed on information to Fisher about HP’s pending acquisition of Electronic Data Systems.

This article was first published as a blog post on CNET News.

Facebook, Twitter stock trading drawing SEC eye?

The high degree of investor interest in shares of hot Silicon Valley companies that aren’t yet publicly traded–like Facebook, Twitter, LinkedIn, and Zynga–may be leading to scrutiny from the U.S. Securities and Exchange Commission (SEC), according to a report late Monday on The New York Times’ Dealbook blog.

Companies like SharesPost and SecondMarket offer exchanges for privately traded stock, and there’s been no shortage of supply thanks to early employees and investors of companies like Facebook and Twitter who are looking to take some cash off the table, the report stated. Much of the interest in the exchanges has been because it gives a peek at the hypothetical valuations of these otherwise tight-lipped companies. When less than 15 percent of early Facebook backer Accel Partner‘s stake sold in November for US$517 million, trading took an uptick and the company’s second-market valuation reached US$56 billion.

Meanwhile, one of Facebook’s most high-profile investors has said that the company does not plan on going public until 2012 at the earliest.

The reason the SEC has taken an interest, according to the Times, may be to gauge the number of shareholders in these companies. Should that number rise above 499 shareholders, a company like Facebook would be required by SEC rules to disclose its financial details to the public. Many of the entities buying second-market stock are pooled groups of individual investors, and if those individuals are counted, the total investor count could rise above that threshold.

Facebook, meanwhile, has taken measures to curb second-market trading, barring current employees from selling stock, and issuing stock to new employees in a restricted form that only takes on value if the company is sold or goes public.

This article was first published as a blog post on CNET News.

Financial Times taps Jobs as Person of the Year

Never mind Mark What’s-His-Name, the Financial Times (FT), Britain’s equivalent of The Wall Street Journal, has handed its Person of the Year crown to Steve Jobs, the Apple CEO and onetime tech-wunderkind-turned-comeback-player of the quarter century.

Saying this year’s unveiling of the iPad “capped the most remarkable comeback in modern business history”, the FT noted Apple’s Jobs-led bounce-back from its near demise in the ’90s, as well as the visionary leader’s perseverance through his recent struggles with cancer. In terms of Silicon Valley lore, the publication said, Jobs now shares the stage with no one.

“Long-time nemesis Bill Gates may be richer and, at his peak, arguably exerted greater sway, thanks to his monopoly over the world’s PC software,” the FT said in a profile of Jobs earlier this week. “But the Microsoft co-founder has left the stage to devote his life and fortune to good works. It is Jobs who now holds the spotlight.”

Despite a slip or two, Jobs has, indeed, enjoyed a fine year. Upon its release, the iPad leaped into consumers’ hands–and the culture’s consciousness–smashing, by some accounts, all previous records of consumer-electronics adoption and threatening to make the PC a thing of the past.

And speaking of Gates, Apple passed Microsoft in overall market capitalization this summer, no doubt a sweet feeling, considering the Redmond giant’s perceived rip-off, all those years ago, of the Mac OS in its Windows OS (remember those bumper stickers that read “Windows ’95 = Mac ’84”?).

The icing on the iCake for 2010 was the realization of a personal dream for Jobs, the featuring of The Beatles on iTunes.

True, Facebook’s Mark Zuckerberg nabbed the Person of the Year nod from Time, but that magazine is old news for Jobs, who has graced its cover no less than seven times.

Still, the year was not without its sore spots, the most remarkable being the bizarre loss of an iPhone prototype and its subsequent appearance on a gadget blog, and Jobs and Company’s uncharacteristically ham-fisted handling of public relations during the iPhone 4 antenna-gate kerfuffle.

Jobs’ eventual public handling of the iPhone prototype mess was much more like him. Officially introducing the by-then anything-but-secret device later in the year, he cracked up the audience by quipping: “Stop me if you’ve already seen this“, a classic example of the charisma that’s helped make Jobs a legend.

This article was first published as a blog post on CNET News.

Intel’s McAfee acquisition clears FTC hurdle

Intel’s proposed US$7.68 billion acquisition of McAfee has been given U.S. regulatory approval.

Intel said in an investor note earlier this week that the proposed deal had been given the go-ahead by the Federal Trade Commission (FTC).

The European Commission has yet to give regulatory approval for the deal. The Commission is due to give its view on Jan. 12.

Read more of “Intel’s McAfee acquisition clears FTC hurdle” at ZDNet UK.

Second-hand tech won’t cannibalize primary market

Rather than hold the second-hand market in contempt, IT vendors should see the benefits this industry segment can have on their brand and ability to rival competing product offerings in the marketplace.

Mike Sheldon, CEO of Network Hardware Resale, acknowledged that first-hand sales channels do occasionally compete with second-hand markets for the same sale, leading to tension between the two markets. His company specializes in selling refurbished networking equipment, with special focus on Cisco Systems equipment.

Despite the competing interests, Sheldon noted that the benefits from having a strong and healthy second-hand market outweigh concerns primary vendors have about the impact on their revenue. “A vibrant secondary market adds significant value to the brand, through lower lease rates and higher perceived brand value, because of the higher residual value [generated by the sale of the equipment],” he explained.

Second-hand equipment sales can also help dominant brands compete against lower priced, entry-level competitors, he said, pointing to a scenario where cheaper, second-hand Cisco product offerings can better rival Hewlett-Packard Procurve or Huawei.

“Most manufacturers acknowledge that they would rather a customer buy a used piece of their own equipment, than a new piece of their competitors’ equipment,” he noted.

He added that customers should view second-hand products as part of their company’s supply chain and not as a potential replacement of new IT equipment.

By combining traditional primary sources and second-hand vendors, IT managers not only have more options to choose between new and used equipment, they can also opt for faster product delivery, and less expensive maintenance or legacy equipment that are no longer in the market, he said.

For companies considering second-hand equipment, Sheldon noted that the range of quality and value is wide, just as it is with new IT equipment marketplace. “Stick with a well regarded, large, support and service-oriented firm, and there is little to worry about in either the primary or secondary markets,” he added.

For the second-hand IT market, in particular, he said warranty and the seller’s resources, including financial, technical, and service resources, are the two most important variables enterprise customers should take note of.

Software businesses think otherwise
But while hardware IT products can be refurbished and resold without much fuss, the same cannot be said for the software market due to licensing restrictions.

For instance, a U.S. court in September ruled that a used software vendor cannot sell unopened Autodesk software he had purchased from office and garage sales, according to an Associated Press report because he purchased the product without explicitly agreeing to the licensing agreement applied to the original buyer. This sales contract outlined that the rights to install Autodesk software were being licensed, not sold.

Some second-hand software companies, however, managed to circumvent licensing agreements. In 2008, a used software reseller found a loophole in Microsoft’s licensing agreement and sold preowned software bought before 2007–before the loophole was plugged.

Players in the video games industry also oppose second-hand sales, where some game publishers had attempted to stem second-hand sales by using one-time codes to unlock multiplayer mode for new games. One game publisher, though, took a different stand. Take-Two’s chairman, Strauss Zelnick, reportedly said consumers should not be punished for buying second-hand games. Instead, he said publishers should give gamers a reason to buy new titles by making and marketing quality game content.

Contact centres: Philippines overtakes old leader India

commentary If you dialled a toll-free customer service number from any English-speaking country in the West a few years ago, you could safely wager a small fortune that your call would be routed to a call centre thousands of miles away in India. There, an executive with an assumed name and a put-on accent would field your query.

Today, such a bet would be risky: the Philippines has just dethroned India as the global hub of call centres. This year, according to analyst figures, Philippine call centre revenues will reach US$5.5 billion against India’s US$5.3 billion. The country’s call centre employee numbers have overtaken India’s too.

Philippines president Benigno Aquino hailed the country’s newfound leadership in the field, describing call centres as a “sunshine industry”. In India, Raju Bhatnagar, vice president of India’s outsourcing industry trade body Nasscom, told silicon.com: “Call centres cannot be India’s monopoly forever.”

Cheap English-speaking labour
The phenomenal rise of the Philippines has been on the back of two winning propositions – cheap manpower and plentiful English-speaking workers.

A decade ago, that was exactly India’s sales pitch. A telecoms revolution in a country where once telephones were scarce created a call centre boom. Thousands of educated, English-speaking executives in vast kiosk farms handled a steady blitz of customer inquiries from multinationals as diverse as General Electric, American Express, Microsoft and British Airways.

But several challenges tripped India’s progress as the world’s favourite call centre destination: in a country with a seemingly bottomless supply of workers, neutralising an array of regional accents when speaking English has been the bane of trainers and workers’ steady diet of American shows such as Friends and The Simpsons has not helped neutralise strong mother tongue influences.

Even after training agents, companies have also had to deal with high levels of attrition as employees jumped to more lucrative jobs in India’s thriving economy.

Infrastructure and tax advantages
At the level of incentives from government, business outsourcers in India can see the tax advantages and infrastructure for night-based call centre work in the Philippines, and contrast those advantages with the transfer-tax battles and the gradual winding down of tax benefits in India. “Companies have had to take one of two directions: set up overseas or move away from voice work,” says PV Kannan, co-founder and CEO of contact centre company 24/7Customer.

For companies such as 24/7 Customer, the choice has been clear. It set up its first call centre in India in 2000. Today, it has 4,500 employees in the Philippines compared with 3,000 in India.

More than half the company’s revenues are derived from the Philippines. “Our strategy was to diversify geographically and have an alternate presence in a place that is seen as a more natural fit, spoken-English-wise and culturally, with our US customers,” Kannan says.

But to put this issue in perspective, call centres are only one part of India’s back-office industry. Hordes of Indian medical transcriptionists, legal assistants, tax accountants, web designers and technical support executives are delivering 24/7 non-voice services to foreign companies. These services are more lucrative and, overall, India still rules the business process outsourcing (BPO) industry.

India’s move to higher-margin work
Some see India’s transition from voice-based work to the higher-margin, back-office work as a natural progression. “India has grown and evolved as a preferred destination to handle more high-end and complex BPO processes,” says Rohit Kapoor, CEO of New York-based outsourcer EXL Service.

EXL set up its first centre in India in 2000 and it has now more than 11,000 employees in India. Its Philippines centre became operational in 2008 and now has 800 employees.

Over the past three to four years, Indian outsourcers have engaged in deeper customer relationships, sought larger investments, and engaged in end-to-end offerings rather than handling individual processes, says Nasscom’s Bhatnagar. He describes the trend as the reengineering and transformation of Indian BPOs.

EXL’s Kapoor adds India’s strength in other areas of BPO is unlikely to wane, despite the decline in voice-based call centres: “India remains a key BPO destination with the focus now on adding more intelligent and analytical work to client servicing.”

Nasscom’s Bhatnagar meanwhile sees the outsourcing opportunity as only limited by clients’ imagination: “It is not a finite cake and certainly not doomsday for Indian BPOs.”

This article was first published at Silicon.com.

India needs ‘inclusive innovation’

NEW DELHI–Economists and business leaders here are urging entrepreneurs to focus on society and disruptive innovation in order to launch ultra-low cost products aimed at low-income groups in India.

“Entrepreneurs need to be socially responsible,” Nobel Laureate Professor Amartya Sen said at the inaugural The Indus Entrepreneurs (TiE) summit held here Tuesday. Attended by 2,000 participants, the three-day annual conference gathers several first-generation business leaders such as Shiv Nadar, who is the founder of HCL, N.R. Narayana Murthy, who serves as chairman and chief mentor at Infosys Technologies, and NIIT Chairman Rajendra S. Pawar, alongside economists, bankers, venture capitalists and inventors to share their insights on entrepreneurship.

According to Sen, India cannot rely on the trickle-down effect alone to alleviate poverty. “High economic growth leads to high growth in public revenue. This gives governments the opportunity to use public fund to do a lot of good things,” he said.

TiE is a global not-for-profit organization focused on promoting and fostering entrepreneurship through mentorship, networking and education. It has 53 chapters spread across 13 countries, including the Delhi-NCR chapter, over 12,000 members and 2,500 charter members who are experienced entrepreneurs, venture capitalists, lawyers and management professionals in their chosen field.

Also a speaker at the summit, R.A. Mashelkar, scientist and former director-general of Council of Scientific and Industrial Research (CSIR), said India needs “inclusive innovation” and acknowledged that “the good thing is the government is aware of this”.

In August this year, India Prime Minister Manmohan Singh had approved the establishment of a National Innovation Council to prepare a 10-year roadmap, extending to 2020. The council is headed by Sam Pitroda, an IT expert who helped revolutionize ICT in India in the late 1980s.

According to Mashelkar, there is a stupendous task before India–a country that is doing well but in which nearly 50 percent live below the poverty line. “It’s important that all Indians do well. The ‘I’ in India should stand for innovation, and not for imitation,” he said.

He added that innovation should include the excluded, be accessible and affordable, and get more from less. “It’s important for businesses to do well,” Mashelkar said. “They need to make higher profits and give back more value to the shareholders. However, entrepreneurs need to do well by doing good.”

India does not need low-cost but ultra-low cost products, the scientist noted. “The products need to be extremely affordability and that can only happen through disruptive innovation,” he added.

British High Commissioner Richard Stagg said both India and the United Kingdom need innovation. “The U.K. needs innovation because it is a very high cost-economy. Innovation will help maintain the high standards of living and prosperity that the people from Britain are used to,” Stagg said. The U.K. has been the country partner of the Delhi-NCR chapter of TiE for the last three years.

Speaking at the summit, filmmaker Shekhar Kapur said 80 percent of innovation is not socially just. “Entrepreneurship comes out of nothing, so if we can force entrepreneurship down to the bottom of the pyramid, we can become a truly great nation,” Kapur said

Scarcity, aspirations lead to innovation
The summit also highlighted that much of the innovation in India is emerging out of scarcity and aspirations. For instance, Mashelkar described how a student in Kerala, Remia Jose, had a lot of household chores to do when her mother fell ill. She would return from school and wash clothes because her family could not afford a washing machine.

To cope, then 15-year-old Remia created a washing machine that ran on pedals and did not require electricity to operate. The machine cost just US$45 (INR 2,000).

Mansukhbhai Prajapati also invented an earthen refrigerator, called Mittikool, which is priced at US$77 (INR 3,500). The refrigerator has separate compartments for storing water and vegetables and also runs without electricity, making it ideal for rural areas.

Prajapati operates a small-scale industrial unit in Rajkot, which has been producing clay products since 1988. Besides the refrigerator, Prajapati’s company also manufactures non-stick pans made from clay, as well as Mittikool water filters, cookers and dinner sets.

The TiE summit will also feature upcoming entrepreneurs such as S. Venkatesh from Goli Vada Pav, which is India’s first ethnic fast-food chain with products made in fully automated HACCP-certified hands-free plant. Other entrepreneurs scheduled to share their journey at the conference include Mittikool’s Prajapati, and Sumita Ghose, who founded Rangsutra to provide employment to artisans.

Entrepreneurs from other countries such as Philippine fast-food chain founder, Tony Tan Caktiong, and Israeli entrepreneur Zohar Zisapeland will also be at the summit. Sessions at the conference will also encompass topics such as sports, education and clean technology, as well as feature women entrepreneurs.

Swati Prasad is a freelance IT writer based in India.

Bank of America cuts off WikiLeaks

Bank of America has added its name to a list of several financial institutions that have refused to process payments for WikiLeaks as the site reportedly readies a document release that targets the banking giant.

“This decision is based upon our reasonable belief that WikiLeaks may be engaged in activities that are, among other things, inconsistent with our internal policies for processing payments,” the bank announced late yesterday.

The announcement comes on the heels of similar moves made by MasterCard, Visa, and PayPal earlier this month, which have limited WikiLeaks’ ability to raise funds to support its Web site’s operation. Those institutions’ Web sites subsequently came under cyberattack by a hacker group in retaliation for the moves.

The Bank of America decision comes as WikiLeaks is reportedly readying a document dump that targets BofA. Julian Assange, the founder of the embattled document-sharing Web site, told Forbes in November that he was readying a release of documents related to the activities of an American bank, but he did not identify the bank. However, during a 2009 interview with Computerworld, Assange said he had 5GB of data from a Bank of America executive’s hard drive.

WikiLeaks responded to the announcement by urging its supporters to stop doing business with Bank of America.

“We ask that all people who love freedom close out their accounts at Bank of America,” WikiLeaks said on its Twitter page. “Does your business do business with Bank of America? Our advice is to place your funds somewhere safer.”

Assange, who was the subject of an arrest warrant related to sex allegations, was released from a London prison last Thursday after posting bail of 200,000 British pounds, or about $316,000. Meanwhile, the U.S. government is reportedly piecing together a case against him for publishing classified Army and State Department files.

This article was first published as a blog post on CNET News.

Report: Intel-McAfee deal could drag out in EU

European antitrust regulators have privately expressed concern over Intel’s buyout of security-software maker McAfee, according to a report, a development that could slow the completion of the chipmaker’s biggest-ever acquisition.

Citing unnamed sources, as well as a questionnaire reportedly being circulated by European Union investigators, The Wall Street Journal said a preliminary review of the deal has raised concern about Intel’s plan to engineer security features directly into its chips.

Regulators have reportedly been asking rival security-software companies about the possibility of Intel giving McAfee products exclusive or special access to some chip features, thus enabling the products to run more effectively than competitors’ offerings.

The concerns could lead to a lengthier study of the deal’s implications, the Journal said, adding that the E.U. has until January 12 to issue a judgment on the acquisition or launch the more-extended review. In mid-October, the Journal reported, Intel said the deal could wrap up as early as the end of this year or in the first quarter. Now, however, the chipmaker is speaking of the first half of 2011 as its time frame.

Intel announced the US$7.68 billion buyout in August, saying that with the advent of more and more Internet-connected technologies, security had become as important a consideration in computing as connectivity and energy-efficient performance. The company says McAfee’s core technology could help it address the issue.

“Hardware-enhanced security will lead to breakthroughs in effectively countering the increasingly sophisticated threats of today and tomorrow,” Intel Senior Vice President Renee James said in a statement at the time.

The E.U. and Intel have had their differences before. In May of last year, the European Commission slapped the chipmaker with a US$1.45 billion fine for violating antitrust legislation, after complaints from Intel rival Advanced Micro Devices led to an investigation. Intel said the Commission’s findings were erroneous and appealed the fine.

Neither Intel, McAfee, nor the European Commission had any comment for the Journal on this latest report.

This article was first published as a blog post on CNET News.

Apple, EMC, Oracle tied to Novell patent buy

One big detail that has been unclear since Attachmate’s acquisition of Novell last month has been the destiny of the 882 patents that are set to be handed over to CPTN Holdings LLC–a consortium of technology companies that was organized by Microsoft.

Would Microsoft be getting all those patents, or would it have to share them with the other companies? More importantly–who are the other “technology companies” that make up the group?

While the first question remains unanswered, the second part of the equation is coming into view this morning, with blog FOSS Patents unearthing a merger filing that outs Apple, EMC, and Oracle as the other companies joining Microsoft. With a reader tip, FOSS Patents discovered the legal notification detailing the three other companies’ involvement, which had been filed earlier this month on a German Federal Cartel Office Web site.

What these four companies intend to do with the patents once the paperwork is all done is a very large question mark. Mary Jo Foley over at ZDNet Asia’s sister site ZDNet US speculates that the ragtag bunch of technology competitors banding together has something to do with the antitrust case between Novell and Microsoft, as well as some of the virtualization patents that could help out EMC, the owners of VMware. How Apple and Oracle, fit into a split, or a possible cross-licensing deal of the 882 patents remains to be seen.

Novell was acquired in late November by Attachmate as part of a US$2.2 billion deal. CPTN Holdings’ involvement was US$450 million in cash that made up a payment. Not included as part of the deal were some of Novell’s Unix-related copyright, which will remain with with the company.

This article was first published as a blog post on CNET News.

Oracle touts strong quarter, Exadata pipeline

Oracle on Thursday delivered a strong second quarter and said its Exadata pipeline is nearing the US$2 billion mark. CEO Larry Ellison made it clear that Oracle’s biggest target is Hewlett-Packard (HP).

Oracle reported fiscal second quarter earnings of US$1.87 billion, or 37 cents a share, on revenue of US$8.6 billion. Non-GAAP earnings were 51 cents a share. Wall Street was looking for earnings of 46 cents a share on revenue of US$8.34 billion.

The company said that new software license revenue growth in the third quarter will be 10 percent to 20 percent. Total revenue growth will be 31 percent to 35 percent. Non-GAAP EPS for the third quarter will be 48 cents a share to 50 cents a share, better than the 46 cents a share expected by Wall Street.

Read more of “Oracle touts strong second quarter, Exadata pipeline; Pans HP” at ZDNet.

Yahoo confirms much-rumored layoffs

Several weeks after rumors began to spread that the beleaguered Yahoo was on the cusp of announcing a round of layoffs before the end of the year, the company has confirmed “personnel changes” of several hundred employees across its offices worldwide.

“Today’s personnel changes are part of our ongoing strategy to best position Yahoo for revenue growth and margin expansion and to support our strategy to deliver differentiated products to the marketplace,” a statement from the company confirming the layoffs explained. “We’ll continue to hire on a global basis to support our key priorities. Yahoo is grateful for the important contributions made by the employees affected by this reduction. We are offering severance packages and outplacement services to these employees.”

AllThingsD reported on Monday night that the layoffs would be Tuesday and could affect up to 700 employees. The final carnage looks to be slightly more than that, about four percent of employees, or about 560 people in total.

About three months after current CEO Carol Bartz took over from predecessor Jerry Yang, the company cut about 5 percent of its workforce. A month prior to Bartz’s arrival, the company had cut about 10 percent, and another 1,000 early in 2008.

This article was first published as a blog post on CNET News.

Yahoo preparing to lay off 600 to 700 workers

Original

Yahoo Inc is preparing to lay off between 600 and 700 workers in the latest shake-up triggered by the Internet company’s lackluster growth.

Employees could be notified of the job cuts as early as Tuesday, according to a person familiar with Yahoo’s plans. The person asked for anonymity because Yahoo hadn’t made a formal announcement.

The planned cutbacks represent about 5 per cent of Yahoo’s work force of 14,100 employees. It will mark Yahoo’s fourth mass layoff in the past three years.

The latest two house-cleanings have come under the company’s current CEO, Carol Bartz, a Silicon Valley veteran hired nearly two years, despite a lack of experience on the Web or in advertising — Yahoo’s main source of revenue.

This week’s round of reductions is expected to be concentrated in Yahoo’s US products group, which already has been undergoing an overhaul since Bartz hired former Microsoft Corp executive Blake Irving to run the division last spring.

The job cuts won’t come as a shock. News of the looming layoffs was first reported last month by two popular technology blogs, TechCrunch and All Things Digital.

Yahoo’s feeble financial growth, stagnant stock price and recent management defections have raised questions about whether Bartz herself might be shown the door before her contract expires in January 2013.

The company’s revenue had edged up by less than 2 per cent to $4.8 billion through the first nine months of the year, reflecting the difficulty Yahoo has had selling ads while other Internet companies such as Google Inc and Facebook are thriving.

Google’s revenue climbed 23 per cent to nearly $21 billion through the first nine months of the year. Privately held Facebook doesn’t disclose its results but it is growing so fast that it had to move into larger headquarters earlier this year.

Yahoo’s stock price fell 31 cents to close Monday at $16.70, a few cents below where it ended last year. Meanwhile, the technology-driven Nasdaq composite index has risen by 16 per cent so far this year.

The malaise has spurred speculation that opportunistic buyout firms might put together a takeover bid for Yahoo, possibly in partnership with another embattled Internet icon, AOL Inc.

Bartz, 62, has repeatedly insisted Yahoo, which is based in Sunnyvale, is heading in the right direction, although she has cautioned it might be another year or two before there’s a significant improvement in the company’s financial results.

Study: ‘Building IT’ to speed energy efficiency

Buildings are the next frontier for computerized instrumentation, leading to a collision between building management incumbents and IT companies looking for new markets, according to a report.

Lux Research is expected to release a report that predicts a wave of acquisitions at the intersection of buildings and IT.

Building control companies Siemens, Honeywell, Johnson Controls, and Schneider Electric are likely to purchase smaller companies, as they already have. Meanwhile, IT companies IBM, Cisco, Microsoft, and Google will continue to look for a foothold in building energy efficiency.

In the past few years, several new and established companies have moved into building control in part because buildings, in general, perform very poorly when it comes to meeting their expected performance on energy efficiency.

Adding modern controls to HVAC systems, such as sensors, and introducing energy monitoring systems and efficiency lighting could improve commercial building efficiency by 24 percent and 16 percent in residential homes, Lux said. These types of improvements could save hundreds of billions of dollars a year worldwide, it said.

On the business side, building efficiency is ripe for innovation because it fits the venture capital investment model relatively well.

In the beginning of the decade, entrepreneurs and investors who moved into green technology often focused on power generation, such as solar or biofuels. Increasingly, green-technology venture capitalists are moving into energy efficiency because it requires less money to develop and commercialize a product.

This article was first published as a blog post on CNET News.

Netbooks may evolve to remain relevant

Netbooks, which were all the rage a few years back, are facing competition from tablet computers and cheaper laptops, said analysts who note that while the product category will stand for now, there may be changes to its form to make it more competitive.

“There is, indeed, a decrease in the netbook frenzy evident just a couple of years ago,” said Dane Anderson, CEO and executive vice president of research at Springboard Research, in an e-mail interview with ZDNet Asia. He added that though netbooks will continue to hold a place in the market, their market share is eroding, especially with tablets gaining prominence.

On the flip side, Gerard Tan, regional commercial director of IT at Gfk Asia, does not think tablets will pose a challenge to the product category. In an e-mail interview, he said tablets are relatively more expensive than netbooks and do not have a full operating system under the hood. He also pointed out that a good portion of netbook customers continue to be students.

Jim McGregor, chief technology strategist at In-Stat, thinks netbooks will continue to hold sway with consumers due to their low price and functionality. In an e-mail interview, he said the educational sector and other segments still prefer portable computing devices with keyboards and will choose a netbook over a tablet.

Springboard Research’s Anderson added that netbooks appeal to customers more comfortable with the traditional computing platforms, especially for less entertainment-oriented apps and functions. “For example, from an ergonomic perspective, netbooks can be superior for certain types of work, such as those dependent on typing, due to its keyboard,” said Anderson.

Netbooks’ cloudy future
Despite the sunny prediction for netbooks now, In-Stat’s McGregor noted that the category may not be able to hold on to its price point advantage in time to come. “[Netbooks] will come under more pressure over the next few years as notebooks and tablets come down in price,” he said.

That said, he believes netbook designs will not remain stagnant. With competition coming from cheaper laptops and tablets, he feels the design constraints of netbooks, such as a single memory module, will change and lead to the blurring of lines between netbooks and notebooks.

Another threat to the netbook is its limited functionality. Springboard Research’s Anderson added that tasks performed on the netbook, such as Web surfing and basic tasks, can be performed on tablets and “sometimes even better”, especially with more apps coming out.

However, mobile apps may become a reality for netbooks. In-Stat’s McGregor noted that if the PC market continues to be unable to run mobile apps, there is a chance of netbooks migrating to ARM-based processors and mobile operating systems.

When this happens, netbooks with ARM processors will become a natural development platform for mobile applications, he said. He pointed out that Apple is trying to move in the direction of running mobile applications on its Mac desktops with its recent OS update.

Cloud-reliant operating systems such as Jolicloud and Google Chrome OS, which were released recently, will also fit into the netbook’s redesign. Springboard Research’s Anderson pointed out that while users can do other functions on their machines, most use the netbook to access the Web. More devices will follow the trend of thinner and more cloud-reliant application models in the near future, he said.

In an e-mail interview with ZDNet Asia, a Dell spokesperson said there is notable growth in cloud-based services for consumers and businesses, as well as roll-outs of increasingly competitive unlimited wireless broadband data plans throughout key Asian markets.

Dell is among one of the companies wishing to profit from the tablet and netbook craze. The US company recently unveiled a convertible tablet-netbook, which is a hybrid netbook featuring a screen that can be swiveled to turn it into a tablet.

Lenovo is another company with a 2-in-1 device. It showed off a laptop with a detachable tablet screen in January at the Consumer Electronics Show.

Local language content to spur e-reader global growth

Despite tablets selling like hot cakes now, analysts are still betting on the popularity of the e-reader, though they caution that for the market to really take off, local language content has to be widely available.

ABI research forecasted that the digital reader market will start to expand globally from 2013, with shipment hitting 30 million that year, doubling that of 2012’s. In-Stat predicted that shipment will hit 35 million in 2014.

One reason for the e-reader’s popularity is that it is designed specifically for the reading of digital content, which is a strong differentiator. “While color, illustrations, and diagrams will eventually be more common on the digital reader device, the e-book reader is not expected to address general computing applications found on media tablets,” ABI’s principle analyst Jeff Orr said.

Bryan Ma, associate vice president for devices and peripherals at IDC Asia-Pacific’s domain research and practice groups, concurred with the trend and said that “in terms of the e-reader market, there’s no way but up”.

Content still king
However, he stressed that the e-reader is only an “enabler”, as content is still king.

“If the content isn’t there, unfortunately, the value proposition of the device falls dramatically short, which was one of the challenges Sony faced 10 years ago when it launched its e-reader,” Ma explained. “It was when Amazon came along and had publishers launch digital content that gave the Kindle the push forward.”

With most of the digital reading content, even the newly launched Google Books, available for now only in the United States, Orr said publishers of printed materials such as books and newspapers need to offer their products in digital format. More importantly, they have to be convinced  to make material available in the local language, which is crucial for markets such as China to grow.

“In two or three years we will enter a period in which much more digitized printed matter will become available in other countries and regions. Western Europe will be first, followed by Eastern Europe and Asia, especially China,” he added.

Ma thinks it is still early days for today’s e-reader market and reckons it will take about five to 10 years for the product and digital content to mature. For now, “there’s a lot of inertia”, he said.

“It is going to take some time as publishers get more comfortable with content getting digitized,” Ma said. “Even with someone as influential as Steve Jobs, it took a while for Hollywood and record labels to move over to the digital format, I think [the publishing industry] could take a bit more time.”

While consumers will continue to form the bulk of the e-reader marker, the IDC analyst believes the educational sector could be the “dark horse” driving the device’s popularity.

“In many ways, it’s a natural fit, the idea of having digitized content on a device that students can carry around. So that makes perfect sense, and I expect to see more momentum in that direction,” Ma noted. That said, while there has been a lot of interest in Korea and Taiwan on adoption of the e-reader by the student population, nothing has been finalized.

In terms of device pricing, Orr said: “For market success, an e-book reader must be priced at less than US$100 [or its] equivalent. Once these obstacles begin to be overcome, China has the potential to be a major e-book market in its own right.”

When asked if it would take a low-cost e-reader to grow the market in China, Orr explained that for now, even the lowest-cost display components used to manufacture the device cost more than US$20, so the device would definitely cost more than that.

However, it is still back to the content game, where digital material will notably be accessible on a wide range of devices. This, said Orr, is good for the e-reader industry as it places more emphasis on reading as an activity. “Consumers will utilize whatever devices they have available to consume content. The opportunity is for an excellent reading experience on dedicated devices in China,” he added.

With a forecasted growth in shipment, he does not think more vendors will join the hardware competition as there is no shortage of this in the market.

“Most of these devices offer the same technical capabilities. Culturally-appropriate content accessible in digital formats is missing today to realize the potential of the market,” he added.

Amazon’s Kindle, Barnes & Noble’s Nook and Sony’s Reader continue to lead the digital reader market in the U.S.

When it comes to Tag, Microsoft’s it

Reminiscent of the old CueCat, Microsoft Tag technology uses a two-dimensional bar code to link a print publication to online content. Tag, though, uses a cell phone’s camera, rather than requiring a separate gadget.

The splotches in the Microsoft Tag bar codes can themselves be customized, such as this one made of hearts for a wedding magazine.

More: Microsoft tries to reinvent the bar code

Credit: Ina Fried

Some examples of Microsoft Tags in action, shown here on a magazine, software box and response card.

More: Microsoft tries to reinvent the bar code

Credit: Ina Fried

Microsoft Tags require users to install a small bit of software on their phone and then use that program, along with their cell phones, to get links to online information.

More: Microsoft tries to reinvent the bar code

Credit: Ina Fried

Microsoft included a tag on the box for Halo Wars, seen here.

Yahoo now on mobile

Yahoo has extended its portal to the mobile platform. At the imbX exhibition hall this week, the Internet giant showcased various functions and personalization features available via the new mobile tool.

Yahoo Mobile is accessible via mobile browsers, where users can visit the built-for-mobile portal to access news, e-mail, social networking sites and Yahoo Messenger.

The mobile tool supports over 400 Internet-enabled mobile devices, including the iPhone, where the application is available as a free download on Apple’s AppStore.

Credit: Konrad Foo

As shown, Yahoo Mobile allows users to access not only Yahoo’s Web-based e-mail, but also other e-mail providers such as Google’s Gmail and Microsoft’s Hotmail. It also includes a section called Social Pulse, which lists social networking sites such as Facebook and Twitter. Another section, called My Interests, where users can bookmark Web links and create a list of their favorite catogeries, such as weather information, stocks and horoscopes.

Vishweshwar S. S. Deo, an engineer at Yahoo, also showed how various other user preferences can be customized. Address book and calendars can also be synced from the phone to a PC.

Credit: Konrad Foo

Daily news headlines are featured in a section, dubbed Today on Yahoo, as shown in the picture. Users can also view a mobile version of the Yahoo News site.

Credit: Konrad Foo

Yahoo also showcased its search engine, which the company said can churn related and more detailed results such as cinemas currently showing the movie title the user keyed in. Called Yahoo oneSearch, the site roped in over 70 content providers to support this tool.

Turochas Fuad, Yahoo’s Southeast Asia head of mobile, said oneSearch allows searches to be geological specific. For example, users located in Singapore will be provided search results that are Singapore-oriented, hence, providing these users added convenience. According to Fuad, 27 telecommunications service providers in Asia use the Yahoo search engine in their own Web sites.

Credit: Konrad Foo

GPS technology goes green

Navteq provides maps used for navigation in devices that support global positioning system (GPS), including mobile phones by Nokia, Samsung and LG.

At its booth in this week’s imbX confernce and exhibition, Navteq featured the winner of a contest the company held to showcase location-based services.

Credit: Konrad Foo

Featured in this picture, Navitime was awarded winner of the Navteq LBS challenge. The company’s winning application is a GPS-guided multi-modal navigation application that provides maps for seven major transportation modes: walking, driving, trains, subways, buses, taxis and commercial air-flights.

Photo credit: Konrad Foo

Two routes are featured in this picture: by car (top) and walking (bottom). Hiroshi Sasaki, an executive with Navitime’s LBS planning and marketing business division, said the application always maps the shortest route for the user. For example, the picture shows how the map guides users via the “walking route” to cut through a landmark, while drivers were shown a detour.

Photo credit: Konrad Foo

Another unqiue feature in the Navitime application is able calculate carbon (CO2) emission and taking this into consideration, maps the routes that are least exposed to CO2, according to Sasaki.

This technology is already available in Japan, he said. The company is also planning to bring the technology and Navitime application to Singapore, as part of its business expansion plan, he added.

Photo credit: Konrad Foo

Nano Equipment also participated in the Navteq LBS competition. The Singapore-based company developed an application called Geo-tagged Mobile Video Broadcast. The application offers a low-cost means for mobile users to broadcast live video feeds to the Web, and at the same time, show the user’s location on the map.

K. C. Chong, Nano’s director of sales and business development, said the company provided its technology to a variety show aired on a local channel, Okto. Chong said the technology can be used for blogs and future broadcasting modes in future creating more opportunities for user interaction and entertainment.

Photo credit: Konrad Foo

Another contestant of Navteq’s contest, TourSpot, came up with an application that combines a GPS-enabled city guide and social networking features. The tool features location-based search capabilities and live mapping, allowing users to tour cities without having to carry a paper map or street directory.

Photo credit: Konrad Foo

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