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 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 African-American 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
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 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 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.
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 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, $5billion 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.