Daily Archives: August 7, 2009

IBM’s “Micro Layoffs” Contribute to Steady Offshoring Trend

IBM, like many big technology companies — Cisco and HP are notable fellow travelers — knows how to shed US employees stealthily and in carefully measured increments, thus avoiding having to report staff reductions to federal and state government agencies.

Still, the layoffs continue, and the numbers tell an irrefutable story. As a Computerworld article demonstrates, IBM’s own numbers, as released in its annual financial reports, show that its US workforce is shrinking: from 127,000 in 2006 to 121,000 in 2007, and down to 115,000 last year. If the pattern holds, IBM will have shed another 6,000 US-based personnel in 2009.

In most instances, these jobs aren’t vanishing into thin air. Instead, IBM is steadily transferring jobs from the USA and other developed nations to the so-called BRIC nations (Brazil, Russia, India, and China).

In IBM’s case, most of the off-shored jobs are moving to India, though other nations are benefiting from the practice, too.

A corollary to the offshoring phenomenon is a trend at IBM and other major technology giants to shift jobs within the USA from high-cost areas to lower-cost regions. Whether the technology titans are offshoring or moving jobs around domestically, their goal is always the same: to lower operating costs in a bid to boost profits.

HP and IBM Raid Sun’s Hardware Customers

At the risk of belaboring the obvious, I think it’s clear that the longer it takes for Oracle’s acquisition of Sun Microsystems to be approved by American and European regulators, the greater the hemorrhaging that will occur to Sun’s revenue and installed base of customers, which obviously represent future revenue for the company.

It’s bad enough for Sun hardware customers that they really can’t be sure of Oracle’s post-acquisition commitment to them or to the Sun products they’ve purchased and own. The situation is exacerbated by an extended regulatory review.

All the while, HP and IBM — not to mention others — are going after vulnerable Sun accounts with competitive-displacement and -upgrade programs. Many of these customers are making the switch away from Sun.

It’s not a landslide yet by any means, but it could get a lot worse if further complications arise in the regulatory-approvals processes.

A key date is September 3, which is when the European Commission will decide whether to pursue a 90-day detailed investigation into the deal.

RIM: Just Missed LTE Patents, Still Wants Them

Mike Lazaridis, the president and co-CEO of Research In Motion (RIM), said today that his company almost had a deal to acquire Nortel’s LTE patents before the latter company opted for bankruptcy proceedings.

In a Canadian Broadcasting Corporation story published today, Lazaridis also confirmed that RIM wasn’t enamored of the LTE patent-licensing agreement that Ericsson collected when it submitted the winning bid for Nortel’s wireless assets in a court-ordered auction.

To wit (from the CBC story cited above):

Lazaridis said Nortel knew his company was interested in purchasing the LTE patents outright but did not make them available in the auction of the other LTE assets. The auction also included a condition that precluded RIM from bidding for those patents within a year.

These conditions undermined the value of the patents, said Lazaridis.

“It’s as if you found a house that you discovered met all your needs and started working on a purchase sale agreement, and in the final hour you discover the owner had given lifetime lease to another party and sublet that property to them,” he said.

“What benefit would there be to consider purchasing that house?” he asked.

So, to extend the metaphor, Lazaridis not only wants the LTE house, but he wants the Swedish squatters removed, too.

Cisco and IBM Among Companies Accused of Infringing Network-Security Patent

In a case filed in May but that apparently got underway recently in a Delaware courtroom, several major vendors — Cisco, IBM, Check Point Software, 3Com, Nokia, Fortinet, SonicWall, and Sourcefire – have been accused of violating a network-security patent originally granted to Peter Shipley in 2000.

Shipley has transferred the disputed patent to Enhanced Security Research LLC, a company that he appears to own and which serves as the plaintiff. Not surprisingly, the plaintiff is seeking compensation in the form of damages.

The allegedly breached patent, for an Intelligent Network Security Device and Method (INSD), can be found at the US Patent Patent and Trademark Office (USPTO) database along with a related patent filed by Shipley.

Shipley has a LinkedIn profile and a website. He’s also involved in another patent imbroglio with Juniper Networks.

In the case against the slew of vendors mentioned above, a story at TG Daily refers to the allegedly patent-offending products sold by the defendants:

The filing mentions a number of products that are alleged to breach the patent, including the Cisco Catalyst 6500 Series Switch, 7600 Series Routers, and others; IBM’s Network Security Appliances; Check Point’s network security appliances and software; SonicWall products; 3Com’s Intrusion Prevention Systems; Nokia’s IP Security Platforms; and a series of Fortinet and Sourcefire products.

RIM’s Nortel Objectives Fully Exposed

If you’re seeking further enlightenment into the soap opera surrounding Nortel’s disposition of its wireless business assets – auctioned recently to Ericsson for $1.13 billion, but subject to a pending review by the Canadian federal government – and its coveted LTE patents, you could benefit from reading the commendable article Jim Bagnall has written for today’s edition of the Ottawa Citizen.

Bagnall is particularly clear on RIM’s motivations in this drama.

I had said previously, on more than one occasion, that RIM is interested primarily in the LTE patents, which were not sold to Ericsson in the auction for Nortel’s LTE and CDMA operational business assets on July 24.

So, why did RIM awkwardly and belatedly make a desultory claim on the wireless business unit if that property was bereft of the LTE patents? Even though RIM has no pretensions to get into the wireless-equipment game, Bagnall explains why the BlackBerry purveyor was displeased with what transpired in the auction process.

RIM was upset not that the winner of the auction would get Nortel’s CDMA and LTE product portfolio — RIM doesn’t want it — but that the winner, which turned out to be Ericsson, also would receive licenses to the LTE patents. To be clear, Ericsson will not get ownership of the LTE patents, but it will get the rights to use them.

As Bagnall explains, RIM isn’t pleased with that situation. It wants to be the owner of the patents, and it wants the right to license them as it sees fit. Here’s an excerpt from Bagnall’s story:

“We have not made any decisions about what we’ll do with these patents,” (Nortel CEO) Zafirovski said in the interview. “Do we sell them or license them? Obviously, the creditors will be deciding that.”

Zafirovski reckons the patents could be worth several hundreds of millions of dollars, assuming they’re sold.

Obviously, RIM may have to wait some time before it has the opportunity to bid on the LTE patents. The Waterloo firm is also reportedly upset at the wide latitude accorded Ericsson in the LTE patents it intends to license from Nortel.

Assuming RIM acquired the LTE patents in a future auction, their value could be diminished.”

So, RIM has a couple major objectives:

1) It wants Nortel to sell it those LTE patents, and it would prefer not to have to go through an auction process to get them.
This explains why RIM has been taking the battle beyond the court of law and into the court of Canadian public opinion. It wants to see whether public pressure can be applied to compel the Canadian government to take action to ensure that certain assets (LTE patents) remain in Canadian hands, ostensibly to be extended and developed further by a Canadian company (RIM). If it has to go through an auction, so be it, but I’m sure RIM would like to find a way to bypass that process entirely.

2) It wants to roll back the LTE patent-license rights Ericsson obtained as part of its successful auction bid for Nortel’s wireless business. If RIM is to become the owner of the patents, it wants the right to license those patents on its own terms. Again, this explains RIM’s appeal to Canadian nationalism, and to its recourse to the political process to get what it couldn’t obtain through a court-ordered auction for an asset it didn’t really want in the first place.

Beyond those two primary objectives, RIM apparently also would like hire some of Nortel’s LTE employees — patent-bearing ones, no doubt — and to procure Nortel tax assets that RIM could use to reduce its taxable income.