In the News
Microsoft Wants to Help Cut PC Costs in Developing Nations
The $100 laptop project is of concern to Microsoft since this computer uses Linux and
shareware rather than Microsoft products. It is designed for developing countries and
low income areas including grade and high schools students in the developed world.
Microsoft is pushing a technology called FlexGo, which is a timer that monitors how
long a consumer uses a computer. The user buys a prepaid card and enters its number
into the PC. As the consumer uses the PC, the clock from the card clicks down.
Suppliers can cut the cost of the PC while consumers pay for them over time with the
prepaid cards. In a trial in Brazil the program offered $600 PCs for about $300.
The Wall Street Journal, 5/22/2006
Free TV Shows on the Web
Walt Disney will offer many TV shows free on the web from its ABC television network.
Some of Disney’s most popular shows will be available free on the Web at any time,
marking a major change in the television network business model. Viewers want to
decide when and where to watch television; they do not want to be constrained by a fixed
schedule from the network. Episodes will be available in the morning after they air the
night before. The viewer can pause, rewind and fast forward the shows, except they
cannot skip the commercials. Ten advertisers like Ford, Procter and Gamble and
Unilever have already signed up.
Wall Street Journal 4/10/2006
The Internet and Politics
It looks like the Internet is going to transform politics and political campaigns, starting
with the 2006 Congressional Races. Both Democrats and Republicans are increasing
their use of e-mail, interactive Web sites, and blogs to raise money, organize efforts to
turn out voters, and assemble crowds for rallies. The Internet is reducing the influence of
broadcast television, at the same time that cable is eating into political ads on commercial
TV. Other technologies for politics include podcasts from the candidate and viral attack
videos which are designed to set off peer-to-peer email distribution chains. He Internet is
more efficient and less costly than traditional ways of promoting a candidate.
The New York Times, 4/2/2006
The Internet Attracts Blacks, and the Digital Divide Closes
More Blacks and Hispanics are using the Internet than ever before. Experts attribute the
trend to the declining cost of laptops, more computers in public schools and libraries, and
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cell phone and handheld devices that connect to the Internet. The latest Pew survey in
February of 2006 found that among people 18 and older, 74% of whites, 61 % of
African-Americans and 80% of English-speaking Hispanic-Americans use the Internet.
In 1998 the same survey found that only 42% of white Americans and 23% of AfricanAmerican adults reported using the Internet. At that time 40% of English-Speaking
Hispanic-Americans used the Net. Almost 9 out of 10 of the 21 million Americans ages
12 to 17 use the Internet. Some 87% of white teenagers, 77% of Black teenagers and
89% of Hispanic teens report having access to the Internet.
The New York Times, 3/31/2006
The Assault on Newspapers
New technologies, especially the Internet, are making an all-out assault on the printed
newspaper. First, newspapers are losing readership to people who prefer to obtain news
from the web rather than read about it in a paper. The loss of readership forces
newspapers to cut their advertising rates. At the same time, important revenue sources
for the papers are moving elsewhere. Classified ads are very profitable for papers, but
employment ads are moving the Monster.com and similar sites. Job seekers can post
their resumes for free, and provide much more information about themselves than they
could in a newspaper ad. Employers can do the same thing with a detailed listing of
positions available, and at about one-third the cost of a newspaper ad. And the Internet
job sites can be accessed around the world, not just locally. Similarly ads for items for
sale have gone to auction sites like eBay. Newspapers still have great operating margins,
but their stocks are depressed as the financial community sees the storm clouds on the
horizon.
Knowledge at Wharton, 3/27/2006
TV Tries to Build Online Fences to Blunt Technology
Some broadcasters are trying technical and legal tricks to keep content from moving to
the Web. Geographic lines used to keep the industry organized, for example, it was
possible to block out sports events in their local markets so that fans had to attend to see
the game. The Web changes all of that with people able to access content via computers,
PDAs and cell phones. Shows that become available via the Web could reduce
syndication value since the viewer will not need the local station or its ads. Foreign
broadcasters who buy US content are also worried about its value, while the content
providers worry about the Web driving down the prices they receive for products.
Wall Street Journal, 3/16/2006
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The Digital Divide is Alive and Well
Researchers at the MIT Media Lab are working on the HDL or Hundred-Dollar Laptop.
The goal is to build 100 to 200 million HDLs every year and distribute them to the poor
children of the world. The HDL will not be a Windows machine, but instead will run
Linux and other open-source software. The display will be a rear-projection screen or a
type of electronic ink. The computer will use flash memory (like that in your digital
camera) rather than a disk drive. Because many poor villages lack electricity, the
computer will have a crank to supplement electric power. The HDLs will connect to one
another using a mesh network in which each computer is a node that relays in formation
to other HDLs. There will be Internet access and the computers will run the Internet
phone software, Skype. The project needs orders for 6 million HDLs to get started and
it has 3 million as of this writing.
Technology Review, August 2005
Reducing Cycle Times
When you make millions of pairs of jeans a year, it is important to come up with new
styles and colors as quickly as possible. VF Corporation thinks it can save $100 million a
year by cutting months off the time it takes to get a new design to market. About 2/3rds
of the time to get a new design to market is devoted to product development. VF is the
world’s largest apparel maker, owning brands like Lee Jeans, Vanity Fair lingerie and
North Face outdoor clothing. The company is developing a platform of collaborative
design tools based on a database of material characteristics, costs, colors and templates of
past designs.
Information Week 2/28/2005
Online Sales Up
U. S. Online retail sales are expected to climb 22% to $172 billion in 2005, with growth
coming in categories like cosmetics and jewelry. The largest category of online sales
remains travel which is estimated to hit nearly $63 billion. According to the Commerce
Department online sales are about 2.2% of total retail sales based on first-quarter results.
Wall Street Journal, 5/24, 2005
Broadband Prices Falling
SBC Communications is offering broadband, high-speed Internet Service for $14.95 a
month, undercutting rivals. Verizon charges $29.95, BellSouth $32.95 and Comcast
Cable $42.95 a month. For the first time, a broadband service is available for less than
AOL’s dial up rate. The low rate is a sign of the competition among traditional phone
companies, cable operators, and other players like direct satellite and even power
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companies. The rate is only available in the 13 states where SBC offers service, and you
must order it over the Internet.
Wall Street Journal (6/1/2005)
UPS Takes the Blue Tooth Plunge
UPS has sales of $37 billion a year, and employs 55,000 workers to sort packages at
some 1,700 facilities world-wide. The carrier handles 14.1 million parcels every day and
scans the bar codes on them so that customers know where the packages are located. In
1996 the company used a scanner that sorters wear like a ring; it is connected to a
terminal worn on the worker’s forearm by a cable. The system worked, but the cable was
continually in the way.
UPS is implementing a wireless bar code scanner for these sorters using Bluetooth, a
short-range radio standard for devices to use in communicating with each other. The new
ring is connected via Bluetooth to a terminal the sorter wears on his or her hip. The
systems allows a worker to conduct up to 60 scans per minute, double the old rate. The
rollout is going on now and required a $120 million investment.
Technology Review, (June 2005)
An Internet Accelerator
Akamai is offering a service that lets customers improve Internet access times. Akamai
will intercept a browser call to a client’s site, and reroute it to up to 14,000 Akamai
network services around the globe. These servers perform intelligent route mapping and
accelerate the path of the request to the client company’s server. As a result, response
times may drop by as much as 50%
Akamai’s traditional business is to host content at the “edge” of the Internet close to users
in order to speed up response. Its new service does not require hosting content, but takes
advantage of its network routing capabilities. Akamai is an example of the hidden
infrastructure that makes the Internet more useful to organizations.
Information Week, (May 9, 2005)
Travel Site Competition Heats Up
Us travel bookings online grew 20% in the first quarter of 2005. But the news is not all
good. Online travel agencies are being squeezed by competitors and carriers.
Travelocity and Orbitz are trying to sell more to corporations and expand abroad.
Advertising costs are rising for the online travel sites as Internet ads in general are
becoming more expensive. The newest strategy is to sell customers services are their
destinations, while improving their operating efficiencies. With airlines all having their
own sites, the multiple-airline sites like Travelocity have a real problem with customers
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accessing their sites to find what airlines serve a market, and then going to the airline’s
sites for its specials and low web fares.
New York Times ( 5/30/2005)
When Outsourcing Ends up in a Divorce
Sears terminated a 10-yeark, $1.6 billion IT outsourcing deal with Computer Sciences
Corporation less than one year into the agreement. Sears claimed that CSC failed to
perform some of its obligations, while CSC argues that the real reason for the divorce is
Sears merger with Kmart.
Last year J.P. Morgan Chase scrapped a $5 billion services agreement with IBM after its
merger with Bank One Corporation.
These and other examples suggest that it is important to have a plan for the divorce, and
bringing IT services back in-house.
Information Week, (5/23/05)
What is the News Worth?
Newspaper Web sites are extremely popular and news executives are watching as
readership of the online papers increases and of the print copies decreases. Newspapers
are making revenue from online ads, but are having trouble getting people to pay for a
subscription online. Of the nation’s 1,456 daily newspapers, only the Wall Street
Journal and about 40 small dailies charge readers to use their web sites. Some papers
charge for online access to portions of their content or for additional features. The New
York Times has about 1.4 million daily visitors while its print circulation is 1,124,0000.
Online access reduces the costs of printing the paper, but the executives are caught now
having to maintain both forms of content. Is there an IT-enabled transformation of the
news going on here?
New York Times, (3/14/2005)
Intel and AT&T Join Forces
AT&T and Intel are cooperating on a new generation of chips that combine Intel’s
computing power with AT&T’s communications expertise. The result should be better
broadband as AT&T helps Intel develop chips for WiMax, a wireless technology that is
expected to have a range of 30 miles. Another result should be cheaper voice services as
the new chips produce chips that handle voice calls over the Internet with the same
quality as existing AT&T circuits. AT&T is also providing the new chips with its
technology that blocks viruses before they reach the PC.
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BusinessWeek, December 20, 2004
Dell Proves You Can Make Computers in the U.S.
Today Dell makes as many computers in half a day (almost 50,000) that it did in three
months in 1991 at one of its Austin Texas plants. If a rush order reaches the factory floor
at 9 AM it is typically in the back of a truck on the highway by 1 PM. Engineers study
each movement, and search computers for ways to save assembly time. Even the
elimination of a screw is viewed as a great event. Dell operates three giant assembly
plants in the U.S., each large enough to house six football fields. It is planning to build a
fourth one and possibly a fifth. Dell’s labor costs are about $10 a machine, 2% of the
overall cost of the PC. Five years ago it took two workers 14 minutes to build a PC, now
it takes a single worker about five minutes to do the same.
New York Times (12/19/2004)
Wal-Mart Knows Everything About You
Wal-Mart has a huge database that shows what its customers buy. Before Hurricane
Frances hit Florida, Wal-Mart’s CIO had her staff come up with product forecasts based
on purchase patterns when Hurricane Charley had hit a few weeks earlier. This data
mining exercise found that stores would need more than the usual flashlights. It turned
out that sales strawberry Pop-Tarts increased by seven times ahead of a hurricane. In fact
the largest pre-hurricane seller was beer. As a result of the analysis, trucks were soon
heading down Interstate 95 toward area Wal-Marts full of pastries and beer.
Wal-Mart has 3600 stores and 100 million customer visits a week. It has 460 terabytes of
data stored on NCR Teradata mainframes. Much of the data comes from checkout
scanners. Wal-Mart has not been shy about IT investments, spending $4 billion in 1991
to create an Extra-net for suppliers, and setting up bar code readers and EDI. It is driving
suppliers to begin using RFID to track products.
New York Times, 11/14/2004
A Global Grid Computer on the Internet
IBM plans to develop a system called World Community Grid in conjunction with the
National Institutes of Health, the World Health Organization, the UN and others to tap
computing power from millions of PCs to fight disease. The project is targeted at
illnesses like AIDS, Alzheimer’s disease, malaria and cancer. The project requires
millions of PC users to volunteer their unused computing capacity. Biology and
medicine are thought to be idea areas for grid computing where computing tasks are
broken into small chunks and farmed out to different machines. These fields use
computers to search for genetic markers for disease and to search for clues on the basic
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processes of life. IBM is financing the program to the tune of several million dollars a
year. Another company will provide the software for running the grid.
New York Times, 11/16/2004
The Believer in No Software
Mark Benioff founded Salesforce.com, an applications services provider that specialized
in Internet-based programs for the sales force. The application has expanded to a
complete CRM system. Pricing is by the seat, and there are some customization options
for different users. But the economics comes from having the same programs used by
thousands of people over the Internet.
Salesforce.com has been so successful that Benioff is expanding the model to other types
of applications, and he argues that no one should have their own software anymore. The
company recently introduced a customization toolkit and a collection of third-party
applications and tools from more than 60 certified partners using Salesforce.com’s web
services. Salesforce.com has engineered its systems so that customizations apply to the
next version of its own software automatically, removing the major reason not to
customize a package.
InformationWeek , 11/8/2004
From Outsourcing to Insourcing
In December of 2002 J.P. Morgan Chase announced a seven-year, $5 billion outsourcing
contract with IBM. The new contract, IBM’s largest to date, would reduce costs and
increase innovation at the bank. In September of 2004, the bank pulled the plug on the
contract after less than two years. Four thousand J.P. Morgan Chase employees who
moved to IBM from the bank will move back to the bank. “We believe managing our
own technology infrastructure is best for the long-term growth and success of our
company as well as our shareholders,” said Austin Adams, CIO at the bank.
The reason? J.P. Morgan Chase merged with Bank One which had an abundance of IT
assets. More important, Bank One had a history of viewing IT as strategic, and it is likely
that this view became dominant at the merged bank.
Outsourcing is one of IBM’s grand designs for becoming a services company, and this
cancellation of the second-largest outsourcing contract on record has to be a major
setback for Big Blue.
New York Times, 9/16/2004
E-Commerce as Another Channel
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The Wall Street Journal reports that shoppers who use the store, a catalog and the web
spend more than other customers. The paper reports a study by Forrester Research that
found customers who shop in stores, on Web sites and with catalogs spend about four
times more than customers who shop only through one of those channels. Customers
who shop two different ways spend two to three times more than customers who use one
channel.
Of course, this finding does not mean that the channels encourage or cause more
shopping. What it may show is that customers who are very interested in purchasing
something at a particular store do more research; perhaps they are committed to buying
something even before they look. Regardless of the cause, it makes sense for stores to
offer all three channels.
The Wall Street Journal, September 3, 2004
Trade Financing Online
Much of world trade follows procedures that feature letters of credit issued by a bank that
guarantee payment, first used by the Medici banking family of Florence over 400 years
ago. Internet companies are trying to change all of this by reducing the cycle time for
trade, sometimes bypassing banks.
TradeCard lets the buyer connect the flow of physical goods with the flow of electronic
funds by handling both through the same electronic document. UPS has a similar product
that lets it transport physical goods and the money to pay for them.
The cost of processing trade documents is 5% of the value of world trade, so there are
tremendous savings possible. In addition, if the financial supply chain is faster, the
physical supply chain will also take less time.
The Wall Street Journal, June 4, 2004, International section, p. 1.
Here’s the Beef
In a Japanese supermarket, a customer can enter the barcode on a steak into a computer t
learn about the cow that provided the steak, its negative test for mad-cow disease, its
breed, sex, date of slaughter, and the name of the producer. Japan tests all of its beef for
mad-cow disease, while the U.S. does not. However, the size of the industry in Japan is
much smaller than in the United States, where most cattle producers are small operations.
However, three large companies dominate the meat-processing industry: Tyson, Cargill
and Swift together process more than 2/3rds of the beef in the U.S. This article points out
that if the political will exists, the technology is here to provide the same kind of
consumer data in the U.S. as the shopper sees in Japan. Some innovative cattle growers
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in the U.S. use RFID tags on their cattle to provide custom medical treatment and to cull
poor weight-gainers early.
Technology Review, June 2004, pp. 49-56
The Supercomputer Race
U.S. companies are making an effort to catch up with the world’s fastest supercomputer
in Japan. This Japanese machine, the Earth Simulator, has more processing speed than
the top 20 U.S. supercomputers combined. The Earth Simulator reaches 41 teraflops, 41
trillion calculations every second on floating point data.
The U.S. is establishing a new supercomputing center at Oak Ridge National Laboratory
in Tennessee. It will house two or three computers from Cray that will be faster than the
Earth Simulator. The first machines should come close to 40 teraflops, and jumpt to 100
teraflops in early 2006, and finally to 350 teraflops by late 2007.
BusinessWeek June 7, 2004, pp. 132-136
Outsourcing at Quantas
Quantas has signed a 10-year contract with IBM Global Services worth $450 million for
on-demand computing. The airline was faced with having to build a new data center, and
it decided instead to outsource to IBM to lower IT costs by paying only for the computing
power it needs.
The agreement covers mostly infrastructure and systems that support core applicatiosn.
Quantas will continue to do its own applications development. IBM will replace most of
Quantas’ 450 Unix servers with Linux servers at an IBM hosting center in Sydney.
Around the same time, Quantas awarded Telstra a $500 million contract to convert the
airline’s telecom infrastructure to an IP network for data and voice.
The IBM contract establishes a baseline of usage, and Quantas can adjust that usage up or
down depending on business conditions. Another advantage is that IBM’s service center
will always be providing state-of-the art technology.
InformationWeek, May 24, 2004, pp 24
hgow
Who will provide the on ramp to the Web? Verizon thinks that it will, and is investing
billions of dollars to bring fiber from the curb to the house. Others believe that wireless
is the answer, but which kind of wireless?
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Everyone should be aware of Wi-Fi as it is found in homes, offices, Starbucks and
McDonalds. Wi-Fi is good for relatively short distances and is the basis for most home
networks.
Wi-Max goes the next step; it is Wi-Fi that can travel up to 30 miles. A few Wi-Fi access
points could provide service for a medium-sized city.
On the other end of the network comes Ultrawideband, which moves large amounts of
data at high speed over a short distance. If you don’t like pay-per-view, you might drive
by a video access point that sends a movie in a few minutes to an Ultrawideband receiver
in our car; at home your car downloads the movie to a digital recorder for viewing.
Then there are Zigbe sensors, small devices about the size of a coin that can sense
different parameters and broadcast the results over wireless. A farmer could use Zigbe
devices to monitor crops, and you could use Zigbe to establish machine-to-machine
communications, say between your computer and your digital recorder.
And don’t count cellular communications out. Even though 3G cellular has relatively
low band-width, there are devices available now that seamlessly let the user leave a
location with a Wi-Fi, high-speed connection, and connect to a cellular network when out
of range of the Wi-Fi service (and vice versa).
I would not count Verizon out, but right now, wireless looks like it will be faster, easier
and less costly to deploy than running fiber to your house.
BusinessWeek, April 26, 2004, pp. 95-102
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