As SCO executives continue to embarrass themselves with outrageous claims in courtrooms, one is reminded of an ageless axiom that applies to all technology companies that swap engineers for lawyers: He who lives by litigation dies by litigation.
Clearly litigation as a business model isn’t ready for mainstream adoption.
Categories: Linux · Litigation · Open Source · Silicon Valley
Om Malik today comes not to praise broadband over power-line technology but to bury it.
Writing about the apparent demise of the technology, Om notes that the Federal Communications Commission (FCC), including its former and current chairmen, Michael Powell (yes, Colin’s son) and Kevin Martin, respectively, were enthusiastic proponents of power-line broadband. He also notes that the FCC’s technological cheerleading ran counter to the feasibility and viability assessments of many industry cognoscenti, who continually cited technical and market limitations.
Not to be cynical, but I wonder whether the FCC really believed in the market efficacy of power-line broadband. As it pursued policies that consistently served the interests of telecommunications lobbyists and their corporate masters, it was convenient for the FCC to be able to point to a looming technological competitor to the broadband establishment represented by cable companies and carriers.
Conversely, maybe the FCC was just misinformed. If so, it would be neither the first time nor the last.
Categories: Business models · Telecommunications · network infrastructure
Sun Microsystems executives offered contradictory information in explaining the shortfall in US sales that the company experienced in a third quarter that was found stunningly short of the mark by market analysts and investors.
On one hand, Sun’s CEO Jonathan Schwartz said some of the US weakness in the quarter resulted from small businesses in the US cutting back on IT spending.
Said Schwartz:
“Smaller companies that could make discretionary decisions about (information technology) spending made discretionary decisions—they definitely tapped the brakes.”
That might be so, but it’s a red herring to suggest that Sun, which still makes a large share of its revenue from high-end servers and storage, was taken down by the discretionary spending of small companies. In fact, as Sun CFO Michael Lehman explained, most of Sun’s US revenue decline was attributable to faltering sales of Sun’s high-end storage and server products, which are used by large telecommunications, retail, and government customers.
This apparent disconnect between the company’s CEO and CFO warrants careful consideration. Sun doesn’t depend on hardware sales to mom-and-pop web retailers, but it continues to rely heavily on some of America’s largest telecommunications and corporate IT buyers. Any sustained downturn in that market segment could be severely damaging to Sun.
In addition to disappointing its investors and the skating judges on Wall Street with its weak quarterly results, Sun also attempted to scale back expectations for the remainder of the year. Guidance was tepid at best. What’s more, Sun will shed more employees — between 1,500 and 2,500 in total — the third major reduction in force under the helmsmanship of Schwartz, who might want to think twice about eating in the company cafeteria.
The vast majority of the cuts will fall in the United States, though the company hasn’t said so.
Despite the $1-billion acquisition of MySQL earlier this year, Sun remains, first and foremost, a purveyor of computer hardware. That is as it has been, and it will remain so. Even in buying MySQL, Sun’s objective is to use software giveaways as a means of retaining existing customers and obtaining new ones so that the company can sell hardware and associated services.
An erosion in sales of high-end servers, which appears to be occurring in the USA, is serious cause for concern at Sun headquarters. Even though sales in emerging economies, such as India and Brazil, are growing briskly, few customers in those countries are ready to buy Sun’s highest-priced, big-margin gear.
Categories: Open Source · Silicon Valley · Sun Microsystems · Telecommunications
How many layers of lipstick can Nortel’s board and executive management apply to the porcine sloth that their company has become?
The corporate bosses at Nortel are up to their old tricks again, spinning mediocre first-quarter results as an auspicious sign of renaissance, even as the company fails to establish meaningful traction in markets such as Metro Ethernet, enterprise networking, and its much-hyped foray into WiMax, a misunderstood technology that has nothing to do with WiFi except for having the same two-letter prefix.
It’s important to note that Nortel’s first-quarter results were significantly enhanced by the release of deferred revenue related to the completion of a big contract in Nortel’s joint venture with LG Electronics that was previously expected to happen in the second quarter.
If Nortel hadn’t moved that revenue forward, the quarter, and the results of its telecommunications unit, would have looked much different. What’s more, by advancing this revenue to the first quarter, Nortel will have to scramble to compensate for it in the second quarter, now well underway.
Although Nortel’s full-year targets are not overly ambitious, investors should tread warily. The company is under siege from lower-cost competitors in its core markets — which is why Nortel has shifted its procurement and other operations to China — and its CDMA base is more albatross than bird of fortune.
Additionally, as noted above, the company is struggling to redefine itself and establish new technology growth markets. It has cut costs to the bone, slashing through meat as well as fat, and there’s a limit to how much more it can do on that front to sustain margins. At some point, sooner as opposed to later, Nortel will have to find top-line growth in attractive markets that offer good, defensible margins.
Do you see it happening? I am extremely skeptical.
Categories: Nortel · Telecommunications · network infrastructure
