Daily Archives: August 15, 2006

Sun Says It’s Moving Forward with Open-Source Java Initiative

In an interview with Computerworld, Bob Brewin, chief technology officer (CTO) for Sun Microsystems, detailed his company’s continuing efforts to make the Java programming language available as open-source code. For those of you interested in how this initiative is progressing, please feel free to read the text of interview.

Am I the only one, though, who gets a feeling that it might take Sun as long to open-source Java as it’s taken Guns N’ Roses to record and release their long-delayed Chinese Democracy album?

RBC Note Says Skype Growth Tapering

In a note to clients issued earlier today, RBC Capital Markets analyst Jordan Rohan said recent inquiries made by him and his colleagues found that downloads of Skype software are declining and that growth in new users has begun to taper.

Wrote Rohan:

Our recent checks indicate … that the user growth is no longer accelerating. Ebay may need to spend on marketing or offer price promotions to reaccelerate growth heading into 2007. If eBay chooses to do both, margins would fall short or our revised forecast.

Rohan indicated that Skype, which provides presence-based VoIP and instant-messaging (IM) sessions over the Internet, is on track to record 51 million downloads of its free software in the third quarter. The analyst believes that number is slightly lower than what Skype recorded in the second quarter.

Rohan also wrote that Skype is likely to add about 18 million new users during eBay’s fiscal third quarter. That would be about the same number of new users that Skype added in eBay’s fiscal second quarter.

As a result of his findings, Rohan lowered his 2007 revenue estimate for Skype to $400 million from $475 million. He also reduced his price target for shares of eBay to $31 from $32 and slashed his estimate of eBay’s 2007 earnings to $1.18 a share from $1.20 a share.

Notwithstanding RBC’s research note, I think eBay might have bigger problems than Skype.

Even if growth in downloads and news users is slowing, Skype has a large base of regular users that could be persuaded to use the peer-to-peer communication service with greater frequency. With more collaborative features, video calls and videoconferencing, and a promotional campaign that stresses Skype’s strengths — integrated presence across communications media (which improves the productivity of communications), improving voice quality, and attractive inbound and outbound calling rates to accommodate one’s contacts who don’t reside within the Skype cloud — there’s no question that Skype could mine greater riches from its existing users.

In many ways, Skype is what SIP-based communications should have become. It allows for NAT and firewall traversal, incorporates various modes of communication with built-in presence, and it facilitates session mutability, allowing users to start a discussion via instant messaging and then switch it to voice as required. It also allows other participants to be added to a discussion already in progress.

Standards-based SIP should have filled the role that Skype occupies, but it seems to have gotten lost in an IETF labyrinth of technological overreach, logistical fog, political gamesmanship, and general incoherence. It’s a shame, really, because while Skype continues to do many things right — and still has better prospects than the RBC note might lead you to believe — it is no substitute for a more open approach that would allow for interoperable IM and voice communication spanning other voice-capable IM platforms.

Let’s hope somebody in the industry — Google, perhaps — sees that opportunity and seizes the initiative. There’s still time for somebody to get it right.

HP Evinces Diplomacy in Announcing Support for Debian Linux

In announcing yesterday new support packages for the decidedly noncommercial Debian distribution of Linux, Hewlett-Packard walked a fine line, seeking to satisfy the demands of two segments of its customer base while managing not to alienate its commercial Linux partners.

For now, HP walked that line like a virtuoso tightrope artist, but that doesn’t mean future problems won’t arise.

Specifically, HP announced that it will support Debian Linux on its ProLiant and HP BladeSystem servers, and on the new HP t5725 Thin Client server, which the company bills as the industry’s first customizable Debian thin client platform.

Jeffrey Wade, HP’s marketing manager for open-source software and Linux, told the IDG News Service that HP is supporting Debian because of demand from customers in the fields of telecommunications and high-performance technical computing. Wade said enterprises in those market segments are turning to Debian to avoid the subscription fees entailed by adoption of major commercial Linux distributions such as Red Hat Enterprise Linux or Novell’s Suse Linux Enterprise Server.

But that, in and of itself, presents an interesting dilemma for HP. Red Hat and Novell have been and will remain HP’s main Linux partners on a worldwide basis, so HP was compelled to announce its Debian support options with considerable diplomacy and finesse. Accordingly, HP has gone to great lengths to emphasize that Debian won’t be treated as a Linux distribution among equals alongside the offerings from Red Hat and Novell.

For example, HP stresses that it will not market Debian as it markets both Red Hat and Novell’s Suse, and that customers must download the Debian software on their own rather than buy it pre-installed on HP servers. HP also says software combinations with partners such as BEA Systems or Oracle won’t be available with Debian, and that the company will not certify its servers for Debian as it does for the commercial LInux distributions.

Nonetheless, executives at Red Hat and Novell will be watching HP and its Debian customers closely. Those telco and high-performance computing shops are making the move for cost reasons, and while Debian does require a higher level of technical sophistication than commercial distributions of Linux, support from vendors such as HP and IBM could make Debian increasingly attractive to larger numbers of enterprise customers in other markets.

I’m not suggesting that this move by HP is a serious setback to the ongoing prosperity of Red Hat or to the recovery hopes of Novell.

Still, it’s a signifier that certain segments of the Linux server market are desirous of a professionally supported, noncommercial alternative to the commercial Linux brands. Those segments of the market could be anomalous, destined to remain a static niche with only negligible growth prospects, or they could be the start of a wider trend.

As such, Red Hat and Novell would do well to remain vigilant.

Network Appliance CEO Says Feds Overzealous in Stock-Option Backdating Probes

In an interesting interview that appears on the BusinessWeek website, Network Appliance CEO Daniel Warmenhoven makes some provocative statements about the growing wave of Securities and Exchange Commission (SEC) investigations into stock-option backdating irregularities at technology companies, including many in Silicon Valley.

Warmenhoven essentially provides a statement of defense for the technology industry in general and the Valley in particular. Other technology CEOs doubtless make similar arguments privately, but Warmenhoven can make the case publicly because his company is not in danger of being taken down by the SEC. With a relatively pristine accounting ledger for the feds to inspect, Warmenhoven feels that he can say publicly what many will only say in confidence to their peers and colleagues.

Distilled to its core, Warmenhoven’s contention is that the SEC has gone too far with the breadth of its investigations. He believes, in fact, that the current investigative mandate of the commission verges on a witch hunt. Those are strong sentiments, but Warmenhoven makes a valiant bid of to back them up with corroborating arguments and supporting data.

He doesn’t always succeed in defending his executive brethren. Sometimes, his content and tone are suggestive of a profound sense of entitlement. At other times, though, he makes some observations that haven’t been made in a public forum, and that needed to be considered, if not accepted.

Interestingly, despite his assertions that the SEC is getting carried away with is prosecutorial fervor, Warmenhoven also believes that more companies will be found guilty of stock-option backdating transgressions and that more executives will go to jail for their involvement in them. At one point in the interview, he says:

It’s pretty clear that the SEC wouldn’t prosecute cases if they didn’t think there were egregious actions at the most senior management levels that were tantamount to fraud. I think they will bring many cases, and probably prevail on many of them.

In Warmenhoven’ s opinion, excluding instances of obvious fraud, three types of technology companies have been caught in the stock-option backdating dragnet: those that were aggressive in using options to recruit and retain employees; opportunists that took advantage of information in their possession that wasn’t available to the public; and those that made administrative mistakes. As far as segmenting the overall universe of irregularities into those three buckets, Warmenhoven says:

I’d bet there will be 10 cases of egregious behavior for every 1,000 cases of clerical mistakes.

Near the end of the article, he also says he is surprised that “companies like Yahoo!, Google, and eBay haven’t been mentioned” in the context of the expanding number of SEC probes. He says all of those companies were “really aggressive hirers at the time, but they haven’t shown up in the press.”

The SEC isn’t done with its investigations yet, though. There’s also a chance that any of those companies, if not all three, will be called to account.