Monthly Archives: November 2009

Dell Looks at Chrome and Moblin for Netbooks

Microsoft doesn’t seem keen on making Windows run smoothly on netbook PCs, so it’s no shock to find PC vendors, such as Dell, investigating the viability of Google’s Chrome OS as an operating system for low-cost, web-centric mobile computers.

Google isn’t the only vendor to target netbooks with a web-optimized operating system. Dell and others have shown interest in Moblin — short for “mobile Linux” — an operating system that Intel bequeathed to the Linux Foundation. Other Linux variants, tuned for resource-challenged netbooks, also have been advanced for web-based computing.

Not everybody likes netbooks — Dell and other PC vendors would prefer to live in a world where consumers bought nothing but high-end notebooks for mobile computing — but the low-cost systems will be with us for a while. While they have found particular favor in the developing world, they’re not without buyers in developed economies.

Vendors that can actually get them to become more useful figure to benefit. That explains the experimentation with operating systems other than Windows, even by vendors that made their names and their fortunes as Microsoft licensees in bygone eras.

Rumored “Google Phone” Unlikely to Compete Directly with Android Licensees

Rumors are spreading and intensifying regarding the development and eventual release of a “Google Phone,” apparently different from the Android-based handsets that Google’s hardware licensees, such as HTC and Motorola, have brought to market.

At this point, details on the Google Phone are limited. There’s no such limit on speculation, though.

I find it difficult to imagine that Google would be so quick to trash its approach to licensing its Android mobile operating system to handset vendors. If it came out with its own phone, one that directly competed with the Android-based handsets of its OEM partners, Google would effectively be throwing kerosene and matches on those relationships. Microsoft, whose hold on those OEMs has weakened in inverse proportion to Android’s rise, would celebrate wildly. Google would be giving Microsoft a lifeline that Windows Mobile doesn’t deserve.

Google isn’t that magnanimous. If this heretofore mythical Google Phone does exist — and it probably does — I suspect it runs entirely on WiFi (or future unlicensed spectrum, such as “white spaces”) and features Google Talk. I don’t think it’s a handset that Google would offer to wireless operators in direct competition against products from its handset partners.

It would be no surprise to see Google emerge as one of the white-space database administrators the FCC has solicited.

Viability of Open-Source Business Models Irrelevant to EC’s MySQL Objections

Yesterday the New York Times published a story that used MySQL as a point of departure for a broader examination of the efficacy of business models surrounding open-source software. At the end of the article, the NYT and its sources appear to have reached the conclusion that nobody except Red Hat makes money as a purveyor of open-source software.

I’m not sure that’s entirely true, though I understand and accept the broader point that’s being made: It’s not easy cranking out sustained profitability as an open-source software company.

Maybe open source is more a cultural or social movement than a profit-spinning business phenomenon. Even granting that point, I’m not sure how or whether it plays into the current brouhaha pitting Oracle against the European Commission regarding the fate of Oracle’s proposed acquisition of Sun, the current custodian of MySQL, for $7.4 billion.

We know why Oracle wants MySQL — as a competitive foil to thwart Microsoft in developing markets and the SMB space, where Oracle’s flagship database isn’t a major player — and we know that the EC has concerns about Oracle’s pending ownership of MySQL. The EC has voiced strong reservations about the competitive repercussions of Oracle’s control of MySQL, which could conceivably be neutered so that it never develops into a meaningful rival to Oracle’s high-end database offering.

The EC claims three vendors — Oracle, IBM, and Microsoft — account for about 85 percent of the world’s database market. It also contends that Oracle’s ownership of MySQL would strengthen the triumvirate’s market grip, potentially leading to market abuses by a cartel-like cabal. Ideally, the EC would like to see Oracle divest MySQL.

There might be an ulterior motive to the EC’s machinations. It’s possible that the EC sees European interests as benefiting more than American ones from the proliferation of open-source software. On the whole, though, I think Neelie Kroes, the EC’s competition chief, means what she says in the following statement:

“In the current economic context, all companies are looking for cost-effective I.T. solutions, and systems based on open-source software are increasingly emerging as viable alternatives to proprietary solutions. The commission has to ensure that such alternatives would continue to be available.”

It’s not so much about European IT dominance as it is about European (and other) companies of all types having cost-effective IT solutions at their disposal. In that context, it’s probably irrelevant whether open source is a movement or an industry with a viable business model. As long as open-source software persists, the EC will get what it wants.

IBM Reportedly Acquires Guardium for $225 Million

Although I have yet to see a formal announcement from IBM, reports suggest that Big Blue is in the process of acquiring database-security vendor Guardium for approximately $225 million.

Founded as Defendo in Israel in 2002, Guardium moved to the Boston area in 2003. It has been headquartered there ever since. Most of the company’s development apparently is done in the Boston suburb of Waltham, but some is done in Israel. The company was spun off as a subsidiary of Log-On, founded by Amnon Keinan and Lior Tal, who has since left the company. Keinan was formerly a vice president at Amdocs, according to a Haaretz report.

About $21 million has been invested in the company since it was established. Investors include Ascent, Cedar Fund, StageOne Ventures and Veritas Venture Partners, as well as strategic investor Cisco Systems.

Guadium’s flagship product is SQL-Guard, which provides database security assessment, access policy control and enforcement, as well as auditing and regulatory compliance. Guardium’s products provide secure access to enterprise data, including databases from IBM, Oracle, Microsoft and others.

Haaretz notes that companies in the same space include Imperva and Sentrigo. Those two vendors, like Guardium, were launched in Israel, which has an exceptionally strong history in data-security technologies. Probably Israel’s best-known Internet-security company is Check Point Software, a firewall pioneer that has grown into an enterprise-security leader with an extensive portfolio of perimeter and endpoint products.

Guardium has about 60 employees. IBM’s acquisition of the company was reported initially by Israeli financial newspaper TheMarker, then covered by Reuters, Haaretz, and others.

A Secularist Amid Technology’s Religious Zealots

I’m not religious about the my consumer electronics or technologies. I am not anybody’s “fanboy.” Generally speaking, I buy and use technology-based products because they meet a functional purpose, not because I am emotionally attached to a brand or to a device. I think having such an emotional attachment is, well, perverse.

So I can’t understand the vehemence with which users of various gaming consoles or mobile phones rail at each other. It’s as it they think something tremendously important as at stake, when really they’re arguing about nothing of lasting significance. Does it really matter, other than to the stakeholders in the companies that provide the products, whether any given consumer favors the Sony PS3 over the Xbox 360? Does it matter, in the big picture, whether you believe Motorola’s Droid is better than Apple’s iPhone?

I don’t get it. And yet others get incredibly emotional over this stuff. I don’t know what’s in it for them, but they seem to feel that they have a personal stake in the outcome.

Somehow, in some way, they emotionally identify with a brand or a device. Are they dupes, deceived by corporate marketers, or are legitimate needs being met? I don’t have the answer, but I’m always skeptical of the advertising culture, especially in an era where our unchecked consumerist cravings have helped to deposit us into a deep, dark economic abyss.

It is with bemusement, then, that I watch the iPhone-versus-Android battle play out. I don’t have a horse in the race, and I’m not sure anybody will collect the purse at the end of it other than Apple or Google (plus the latter’s handset licensees).

Still, people who have nothing tangible to gain — other than a sense of being “right” about choosing an allegedly superior device for their personal conspicuous consumption — seem exercised about it al the same. Through it all, I feel like an anthropologist studying an exotic post-historic civilization.

News Corp. Stirs Pot in Threat to Cut Exclusive Deal with Microsoft

News Corp. potentate Rupert Murdoch supposedly has been pondering a delisting of his company’s news content from Google’s search network.

Moreover, according to reports, Murdoch has been considering an exclusive relationship that would see News Corp’s content be searchable and available only on Microsoft’s Bing search engine. Apparently Microsoft would pay for the privilege, but nobody knows how much.

In fact, not much is known about details related to Murdoch’s prospective flight from Google and toward Microsoft. That’s because it’s an idea that hasn’t been fully developed.

It hasn’t been fully developed because Murdoch is testing the waters. I don’t think he has made a decision to throw in his lot with Microsoft — not yet, and perhaps not ever. What he does want, however, is a better deal from Google. Like many publishers, he’d like a bigger cut of news-related advertising-search revenue, especially from Google, which remains the runaway web-search leader despite Microsoft’s rebranded and revitalized efforts under the Bing moniker.

Murdoch is known to be obdurate, but he didn’t build a vast media empire by being thick as a brick. He knows that Google is the search leader, that his striking an exclusive deal with Microsoft won’t shift the balance of power appreciably in the search world, and that his news properties would likely suffer more than Google would from any scorched-earth tactics he might choose to employ.

The News Corp. chieftain is stirring the pot, hoping Google comes into the kitchen to see what’s cooking. The problem is, most of his firm’s content isn’t irreplaceable. Google would like to be able to index it, sure, but Google could live without News Corp.

How would News Corp. — in a world where more and more people consume their news online — fare without Google?

Elucidating Technology Layoffs

At GigaOm, Kevin Kelleher recently wrote a blog post that attempted to answer the following question: “Why are tech layoffs rising in a recovery?

Although I think the question is skewed — you call this a recovery? — what follows are my replies, enumerated for the convenience of the reader.

1) The alleged recovery isn’t really a recovery in the traditional sense. Without jobs or income security — and mired in crushing personal debt — many American consumers can’t and won’t spend at their formerly shop-till-you-drop pace. The American consumer accounts for as much as 70 percent of national GDP (though some economists energetically debate the exact percentage).

2) What happens in the stock market has a tenuous connection to what happens in the real world. Stocks rise and fall, based on perceived valuations, but don’t make the mistake of thinking those fluctuations are always related to what’s happening in the underlying economy.

3) Much of information technology is being commodified. Yes, there are areas that still require advanced R&D conducted by brainy PhDs, but they’re not as prevalent as they were.

4) IT is a mature industry. It’s been around nearly 40 years. Like other industries that preceded it, IT will exhibit the telltale signs of maturity: slow growth, consolidation, commodification, an increased focus on reduced operating expenditures, etc.

5) Whenever possible, IT companies are shifting jobs to low-cost geographies, such as China, India, Eastern Europe, Latin America, and even the Philippines. This phenomenon is tied to points 3 and 4.

There doubtless are others reasons, too, but those are the main ones.

Cisco Surfaces in Transcribed 9/11 Pager Messages

At CBSNews.com, Declan McCullagh reports that pager transcripts, apparently documenting messages sent during the events of 9/11, have been posted at WikiLeaks.org.

As McCullagh notes, the pager logs seem to represent messages transmitted on September 11, 2001, through the networks of Arch Wireless, Metrocall, Skytel, and Weblink Wireless. It’s not clear how the transcripts were obtained, but over-the-air interception is strongly suspected.

From an information-technology perspective, the most intriguing message is one allegedly sent at 4:18pm by Jim Massa, then Cisco’s director of federal operations, to Charlie Giancarlo, then Cisco’s chief development officer and now with private-equity firm Silver Lake, which recently claimed an ownership stake in Skype.

Here’s an excerpt from McCullagh on the Cisco-related exchange:

Whatever their origin, the logs are likely to raise more questions than they answer. Take this intriguing message that was sent by Jim Massa, then Cisco’s director of federal operations, at 4:18 p.m. It said: “NEED TO DISCUSS FBI TEN THOUSAND UNIT REQUIREMENT ASAP.” The recipient appears to be Cisco Chief Development Officer Charlie Giancarlo, who left the company in 2007 and now works at a venture capital firm in Menlo Park, Calif. called Silver Lake.

A Cisco representative said in e-mail to CBSNews.com: “I know we worked closely with law enforcement after the attacks but I don’t have any specifics.” Massa did not immediately respond to a request for comment.

One possibility is that the FBI urgently needed routers or other Cisco gear to upgrade its own network. But technical experts that CBSNews.com contacted believed it’s more likely that the FBI was working with Internet service providers to reconfigure their networks with Cisco hardware to allow wiretaps to be conducted more readily. Around that time, Cisco was beginning to develop wiretap capabilities for its routers — a concept that eventually became known as “lawful intercept.”

Jim (or James) Massa now runs Loom Enterprises, a consultancy that allows “synergistic relationships to be formed between individuals, businesses, educational institutions, governments as well as faith-based and non-faith-based non-profit organizations.”

We’ll seen whether McCullagh can learn more about the FBI’s urgent “ten-thousand unit requirement.”

Brocade CEO: “I Never Was Actively Shopping the Company”

Every company worth its salt — and many others besides — has a contingency plan. The fact is, there’s a Plan A, there’s a Plan B, and sometimes there are Plans C, D, and E.

The world rarely conforms to our wishes, and we must adapt accordingly.

So, it’s no surprise that Mike Klayko, CEO of Brocade Communications, now proclaims that his company is destined for greatness as an independent entity. With no industry giant willing or able to buy Brocade, at least not for an amount to the liking of Klayko and the company’s board of directors, the storage-networking vendor’s chieftain must pretend that independence was the plan all along.

I have only read his words, not heard or seen him speak them, so I can’t say whether he’s a good actor. However, nearly everybody believes that Brocade was for sale, and that Klayko, realizing that his company was looking like a jilted bride at a marriage altar just off the Las Vegas Strip, had to project an alternate reality.

Said the Brocade CEO of the acquisition speculation, which was widely believed to have emanated from the company’s investment-banking agent, Qatalyst Group:

That’s just wrong. Why would we want to go ahead and do that when we have never been in a better position than we are today?”

Oh, I don’t know. Could it be because the company was afraid the consolidation wave would ebb and never come back ashore?

That issue aside, could Brocade have been for sale previously, but is no longer on the block? Not according to the company’s CEO:

“I never was actively shopping the company. When there’s misinformation we have to correct it. . . .”

“We’ve got a very bright future. We’ve spent the last five years planning and putting all the different pieces in place to execute on a very, very large infrastructure build out opportunity.”

Be that as it may, we could have a lot of fun parsing Klayko’s words. For example, perhaps he wasn’t “actively shopping the company,” but others, including Brocade’s investment banker, were doing the job for him.

Those finer distinctions probably don’t matter. Brocade might not be for sale, but it could still be bought. Similarly, the company still has OEM relationships with IBM and Dell, even if its relationship with Hewlett-Packard, which recently bought networking vendor 3Com, is suddenly fraught with uncertainty.

Broadpoint AmTech analyst Brian Marshall retains a sanguine view of Brocade, both as a takeover target and as an independent player.

“I think Oracle would be interested. Dell, Juniper, all those guys. So I definitely think it’s a strategic asset and people are probably kicking the tires there. At the end of the day, let’s look at it on a pure fundamental basis. This name’s cheap.”

For investors, it’s always wise to evaluate a publicly traded company primarily, if not exclusively, on the basis of its fundamentals. Everything else is a speculative sideshow.

What Intel Capital and Cisco Have in Common

What do Intel Capital and Cisco have in common?

Well, they probably have a few things in common, but something they definitely share is an interest in promoting and profiting from proliferation of the smart grid.

It’s an obvious connection.

Intel makes microprocessors, and it’s eager to get its chips into any IP-connected device that requires, or could benefit from, an electronic brain. Meanwhile, Cisco is the world’s leading purveyor of IP-based network infrastructure, including routers, switches, and wireless networks. Once all the embedded devices and end points on the smart grid have electronic brains, they’ll need to be networked to share and disseminate data.

Talking to Fortune’s Michael V. Copeland about Intel’s investments in companies that promote ubiquitous computing, Arvind Sodhani, Intel’s head venture capitalist, said the following:

“We benefit from growth in all those areas. Take clean tech and the electric grid. As the grid becomes more intelligent, more computing will go into things like household meters. We want to get our Atom processor into meters, and there are 120 million households in the United States alone.”

It makes sense. As conventional information technology (PCs, servers, enterprise networks, service-provider infrastructure, etc.) advances further into slow-growth maturity in the developed world, vendors such as Cisco and Intel will be seeking greener pastures in cleantech adjacencies.

Nokia Slashes Jobs Amid R&D Overhaul

On its own and as part of its joint venture with Siemens, Nokia is shedding staff in concerted efforts to reduce costs.

Last week, the world’s largest manufacturer of mobile phones cut 330 positions at research-and-development facilities in Denmark and Finland. Earlier this month, Nokia Siemens Networks (NSN), its telecommunications-equipment joint venture with Germany’s Siemens AG, announced that it would eliminate between 4,500 to 5,800 jobs by 2011.

Nokia today announced further headcount reductions, indicating that it would pare about 220 R&D jobs in Japan as part of an ongoing restructuring.

Said Nokia:

“As part of its global efforts to align its research and development (R&D) operations to be in line with its focused portfolio of future products, Nokia will be reducing its R&D activities in Japan.”

Before today’s move, Nokia had announced about 4,000 job reductions since January, including approximately 1,300 voluntary redundancy packages.

Nokia’s R&D group includes about 17,000 employees. Nokia, like many other information-technology concerns, is shifting some R&D jobs from relatively high-cost jurisdictions to lower-cost ones.

The company announced a third-quarter net loss of 559 million euros amid rising competition in the smartphone market. It also has suffered well-documented problems with its Nokia Siemens Networks joint venture.

Ciena Gets Nortel’s MEN; NSN Faces Uncertainty

Now that Ciena has claimed Nortel’s Metropolitan Ethernet Networks (MEN) business assets, which include optical- and Ethernet-networking products and technologies, questions linger about what exactly transpired and what happens next.

Ciena’s winning bid was worth $769 million, about $248 more than the stalking-horse bid it submitted in October. Comprising $530 million in cash and $239 million in senior convertible notes due in June 2017, Ciena’s bid topped an indeterminate offer put forward by ambivalent Nokia Siemens Networks (NSN), which did its best afterward to rationalize why it didn’t come away with the auction prize.

The big winners in this auction are Nortel employees. About 85 percent (2,000) of Nortel’s MEN personnel will join Ciena, presuming the deal clears regulatory hurdles. The transaction must receive court approval in the United States and Canada, which it expects to get at a joint hearing December 2, as well as in France and Israel.

Based in Linthicum, Md., Ciena practically doubles in personnel as a result of the acquisition. It also gains about 1,000 new customers spread across 65 countries. Included among those new customers are carriers AT&T Inc., Verizon Communications Inc. and Comcast Corp.

Ciena says the deal will be “significantly accretive” to its operations in fiscal 2011. As noted by the Wall Street Journal, Nortel was a leader in developing 40 gigabit optical-networking equipment, allowing carriers to quadruple their network capacity without incurring much additional cost. It is also among the industry leaders developing the next-generation 100-gigabit optical-networking technology.

But the past tense of the preceding paragraph is notable. Like the rest of insolvent Nortel, the MEN business has struggled under the purgatory of bankruptcy protection. For the first nine months of this year, Nortel’s MEN business reported revenue of $988 million, down 21% from a year earlier. Results have been gradually worsening. In the latest quarter, Nortel’s MEN revenue fell 26 percent to $295 million in relation to the corresponding quarter last year.

While the market for carrier-Ethernet gear continues to grow, even during a downturn that has inhibited expansion in most carrier-related market segments, competition is fierce. Infonetics expects the market for carrier-Ethernet equipment to reach $34 billion by 2013, growing from $17 billion in 2008. Nonetheless, competitors including Huawei, Alcatel-Lucent, Ericsson (Redback), ZTE, and Extreme Networks. The added scale that Nortel brings to Ciena will help, but it doesn’t guarantee success.

Besides, as many analysts have noted, Ciena and its executive team have no experience integrating an acquisition of this size. Any student of technology acquisitions will tell you that more is likely to go wrong than to go right, especially when the team managing the integration hasn’t had the benefit of previous experience in similar circumstances.

Still, there’s no question that Ciena’s leadership is confident of being on the right track and will do its best to leverage what Nortel’s MEN assets offer. The same cannot be said for Nokia Siemens Networks (NSN), the Swedish-German joint venture that finds itself back in limbo after this auction. Having already fallen short of the mark in a bid for Nortel’s wireless assets, ultimately captured by Ericsson, NSN now has been a two-time loser in the Nortel auctions.

Bidding this time in conjunction with private-equity firm One Equity Partners, Nokia Siemens Networks (NSN) was at pains to justify its failure to overtake Ciena in the MEN auction ring. In a terse statement posted on its website, NSN said the following:

Nokia Siemens Networks confirms that, with its financial partner, it did not submit the highest bid for Nortel’s optical networking and carrier Ethernet assets in the bankruptcy court-sanctioned auction that began on Friday morning and extended through the weekend. Nokia Siemens Networks believes that its final offer represented fair value for the assets, and further bidding could not be financially justified.

It’s possible that the auction bid for Nortel’s MEN assets was something of a Hail Mary pass for the joint-venture partners. Now that it has fallen incomplete, Nokia and Siemens are likely to reconsider their commitments to the venture. Many think Siemens will want out of the arrangement. Meanwhile, Nokia might not have the fortitude or resolve to buy out its partner’s stake in the company. There’s a reasonable possibility that the joint venture might seek another partner or put itself for up for sale completely.

As for Nortel’s creditors, they must be pleased. At the end of the auction, they received a winning bid that was nearly a quarter-billion dollars more than the initial stalking-horse offer from Ciena. It wasn’t quite the $1.13-billion payday they derived from the sale of Nortel’s wireless assets to Ericssson, nor the more than $900 million they got from Avaya for Nortel’s enterprise business, but it wasn’t bad.

Gradually running out of assets to sell, Nortel is expected to make an announcement about the sale of its Global System for Mobile Communications (GSM) business later this week.