Reality Check | Ephraim Schwartz » May 2007

May 29, 2007 | Comments: (0)

Dumbing down and smartening up via the Web

TAGS: Web 2.0

Social networking and information design will have a profound effect on generations to come

As an old friend once told me, whenever there's a transition in a culture, something is lost. When Gutenberg invented the printing press and written information became widely available, tricks for recording history orally were lost. Prior to literacy, people leaned on poetry more to relay their histories because poetry provided a structure to help them remember their stories.

We are going through such a transition now. And we can watch as two opposing trends regarding people's relationship with information unfold thanks to the World Wide Web.

One trend is bent on grabbing folks' attention; the other is geared toward moving their attention to where deeper sets of shared knowledge reside. How these two trends affect one another could have wide-reaching implications on how information affects our lives.

The scarier trend is what I call the dumbing down of information to accommodate what some are calling Digital Natives, aka DNs. As far as I can tell, the term originated in 2001 in a blog titled "Digital Natives, Digital Immigrants" by Marc Prensky.

Prensky says DNs are all "native speakers of the digital language of computers, video games and the Internet."

Digital Immigrants, on the other hand, are "those of us who were not born into the digital world but have, at some later point in our lives, become fascinated by and adopted many of or most aspects of the new technology."

Gartner, on its media Weblog, six years later, picks up on this theme, proclaming that DNs "absorb information differently from digital immigrants."

Whereas Digital Immigrants are "more methodical, find text a far more efficient way of absorbing information, and invest time clicking on a video link only if they think it will really add value to the story," Digital Natives "graze somewhat randomly for information, scanning Web pages for photos and video, and reading the text only if the images capture their attention."

This is where I start to get scared.

Please understand me, I do not believe information needs to be "dumbed down" for DNs because they are any less intelligent than non-natives, aka DIs. Obviously, any evolutionary changes in humanity, negative or positive, would take a bit longer than the approximately 25 years since the birth of the PC age.

What I am saying is that, as in any business, the people who make money from consumers have figured out how to attract, how to sell, and how to keep customers coming back to their Web site, be it an e-store or an online news service. Therefore, we can expect over time more and more of the Web to adopt the environment that appeals to those who "read text only if the images capture their attention."

Capturing and holding the attention of a viewer, not a reader, started with television. Sociologists have long been commenting on the fact that American television programming jumps from scene to scene far more rapidly than British programs do. It both appeals to and, I think, helps create viewers with shorter attention spans.

I have two concerns about this development. One, unless we get DNs to behave more like DIs, future generations will have a harder time developing the study skills they need to master and understand their environment in order to become the kind of professionals -- doctors, architects, engineers -- that we need to keep a complex society running.

My second fear is political. Unless our future generations learn to analyze content and understand issues by reading deeply, they will be far more susceptible to being manipulated -- and not likely for noble goals.

OK, that's on the downside. On the smartening up side, I see the concept of social networking -- in business and nonbusiness environments -- creating a growing pool of people who have access to and thus are aware of far more information than ever before.

Companies such as Attensa and ConnectBeam are at the cutting edge, creating enterprise-level social networking technology that allows users to easily exchange information. This in turn allows more people to use information more intelligently.

Making information and the people who possess it available to others can have a viral effect, too, one that will motivate future generations to tap into a variety of sources of information to obtain a complete picture on any given issue.

Perhaps we can also say when you have a transition in the culture something is gained.

Posted by Ephraim Schwartz on May 29, 2007 03:00 AM

May 25, 2007 | Comments: (0)

Intel has a gripe with the software industry. Is Moore's law becoming a software afterthought?

TAGS: None

The saying "the more things change, the more things stay the same" was never more evident on Friday when Intel and Sun sponsored a roundtable discussion on hardware and software development for the press in San Francisco .

The change was represented by the fact that Intel no longer makes single-core processors in favor of only multi-core processors. What has stayed the same, at least for the past 12 years that I've been dealing with Intel, is the Intel mantra: The software has to catch up to the performance of the hardware.

Back then, Intel used a subtle approach. Whenever the chip maker unveiled a new chip, it would have its software partners on hand to demonstrate applications of the future that would use every cycle of processing power put out by the latest processor.

At the roundtable discussion, however, Intel was more into the blame game. This time Shekhar Borkar, Intel Fellow, director of microprocessor research, expressed his obvious frustration by saying he had a "complaint" with the software industry for not creating applications that can take advantage of parallel processing.

"It is imperative that software has to double the amount of parallelism [it can address] every two years," Borkar said.

However, when asked later in the discussion what will happen if they don't, his answer was weak. He said if one company doesn't do it, a competitor will.

That may be true but two things seemed even more obvious to me.

One, the software industry has a lot more on its plate than parallel-processing-enabling its applications.

The industry is going through great change at the moment, mainly with regard to Web 2.0, and here the network and performance through the network is driving much of software development. See companies like Akamai, and Citrix who are looking at ways to deliver and execute applications in the network, and Adobe, whose Apollo project is looking at a way to create hybrid applications that start in the network and finish on the desktop.

The other obvious truth is that this is not a technology problem for the software industry but a business problem.

Intel's business model requires that it must sell its chips in the millions and so far the only way they have come up with to do that is to tout the chips' performance, and to a lesser degree, the power savings on mobile devices.

I contend that if the software industry had the same business model, it would have solved the problem of how to use parallelism in its applications years ago when it was first briefed by Intel and others on this technology.

Rather, the software industry has a different business model, and other problems to solve that include inter-operability, integration, SOA, ease-of-use, consumerization of the enterprise, Web 2.0, software as a service, master data management, compliance, e-discovery, the list goes on. While performance is always needed and appreciated, the goals are far more complex.

I think it is disingenuous on the part of Intel to chastise the software industry as it did at this roundtable when it is obvious Intel has a vested interest in making performance the goal of every segment of the high-tech industry.

Nevertheless, Borkar continued to chide, saying that since Intel comes out with a new multiple of its multi-core processor every two years, the software industry has two years to go from 2-way to 4-way, and two years again to go from 4-way to 8-way.

In a moment of candor, Borkar did say, "If the software doesn't keep up, the chip becomes a paperweight."

One of the more interesting solutions that may not require software to keep up with the pace of hardware performance also came from Borkar, however.

It is called domain specific languages.

For example, you could write a program using a domain specific language just to address TCP/IP processing. And, if you want to write a program to parallelize TCP/IP you could write it just for that kind of network.

For further enlightenment I turned to one of the best and most widely quoted chip analysts, Nathan Brookwood of Insight 64 to gain a better understanding of the problem of creating multi-threaded aware applications.

Brookwood complied, in spades.

"To think how to code in parallel threads is an unnatural act," Brookwood told me.

By and large we think in a linear fashion, Brookwood said. Clearly grammars to think and express algorithms in parallel form are needed but most tools don’t do that.

Brookwood believes we are going to have to wait for the current generation of linear programmers to die off or get kicked upstairs into management and before we get a new generation that thinks parallel.

There is, however, a Sun tool or parallel development language, not quite productized yet, called Fortress that allows programmers to design applications that can take advantage of multi-core processors.

"When you write stuff [in Fortress], it is inherently parallel and if you want things not parallel you would have to go out of your way," Brookwood said.

The problem really is that multi-threading only helps a few computer applications that appeal to ordinary people. Sure it is needed for scientific computing but remember, as I said, Intel needs to create a demand among millions of buyers, not thousands.

The killer app does not yet exist and even Borkar admitted that.

Nevertheless, Brookwood does believe that over time it is important to create programs that are multi-core aware.

Up until now software developers had a free ride. Intel and AMD could make one, single, faster chip and the software ran faster. That kind of free ride ran out of steam and the new ride is multi-core.

"Multi-core is the new megahertz," Brookwood said.

However, it is more visible to the software than megahertz. It requires the programmers to think about and change what they are doing.

Unfortunately, that really hasn't happened. As Intel went from a single to dual thread, the ISVs created a whole bunch of narrow solutions that work with two threads, but they didn't think in terms of the bigger picture: multi-threading as a concept.

Now these same developers have to rethink how to make an application work from two threads to with four threads.

In the meantime, Intel doesn't want to wait five or ten years to make sure its processors don't turn into paperweights.

But I think they may have to wait, and over time the industry may take us in so many new directions Moore's law may become a mere afterthought.

Posted by Ephraim Schwartz on May 25, 2007 01:59 PM

May 23, 2007 | Comments: (0)

Google owning spectrum is a bad idea

TAGS: None

Owning the premier search site or becoming the single biggest media player in the still-emerging online advertising industry is one thing; becoming a telecommunications provider, aka, a phone company, is another.

If Google enters the bidding for the 700MHz spectrum, it "[has] not ruled in or out participating in the auction as a licensee," said Richard Whitt, Washington, D.C. telecom and media counsel for Google, as reported by IDG News Service's Nancy Gohring. If Google enters and wins the auction, it could turn out badly for everybody, including Google.

Gohring reports that Google has requested the FCC to rule on whether or not it can buy the spectrum and then resell the right to use it at auction.

"On Monday, Google filed a letter with the FCC asking the agency to allow winners of the spectrum to create an auction system that would let third parties bid against each other for the right to use the spectrum," she writes. "The system could be much like AdWords, Google's offering that lets companies bid against each other in order to display online advertising tied to search terms."

This is in direct opposition, to SpectrumCo, the consortium between Comcast, Time Warner, Cox, Advance-Newhouse, and Sprint Nextel.

According to the Telecom Law Blog, "This group recently filed an ex parte letter and white paper in the FCC’s 700 MHz auction rules proceeding advocating the importance of a mix of license sizes (both in terms of service area and in spectrum amount) for the upcoming 700 MHz auction."

The blog further discusses why this is important, pointing out, "SpectrumCo argues that larger spectrum block and service area license plans are inefficient and may encourage spectrum warehousing, while smaller geographic and spectrum allocations facilitate increased auction participation and competition, enhanced rural coverage and ultimately create higher auction revenues," for the government.

So the Google petition talks about an auction that would let third parties bid against each other "for the right to use the spectrum." Nothing about reselling the spectrum, but setting up an auction, most likely among advertisers like AdWords to use the spectrum that Google, if their scenario works out, still owns.

What will that do to the wireless airwaves? Will we be flooded with ads on our cell phones and other wireless devices? How else will these third parties get a return on their investment after they pay Google?

It all sounds very suspect to me.

To top it off, as I pointed out in a story written almost 5 years ago, from a technological point of view, the 700MHz spectrum remains better suited for high-speed access to the mobile Internet than the 1.9MHz spectrum. The 700MHz spectrum passes through buildings and around objects more easily than higher-megahertz bandwidth.

If Google could afford to buy up all of the blocks of spectrum by outbidding all the other players (some estimate total bids could go as high as $50 billion), it would have far more control of its own destiny, Gohring points out, noting that "Google has complained about the difficulty of working with operators, which control the wireless networks, and faces the challenge of developing products for the very wide array of different phone software platforms. Operating its own network could allow Google to offer the types of services it wants to."

But does it know how to operate a network? It has no real track record in telecommunications, and hiring experts at the last minute just doesn't cut it.

Truth is Google knows very little about running a telecommunications network. The infrastructure is enormous and would probably require as many employees to run it as now work at Google.

Do you think it might get a bit distracted?

The strategy most large companies have used over the last half dozen years has been to divest themselves of everything that is not part of their core technology, outsourcing it to someone who does technologies not core to the business so it can focus instead on what the company does best.

If Google starts buying spectrum, no matter what it does with it, it seems to me that they are running counter to what the best business minds have been telling us for many years.

I have no doubt Google could afford to make the winning bids for all of the 700MHz spectrum, but bear in mind it could put a dent even in its deep pockets.

The $50 billion bid estimate may be a bit over the top but the auction for the PCS (Personal Communications Services) spectrum auctioned off a total of 422 licenses covering 195 markets and raised $16.8 billion. Sprint owns most of it. The opening bid for the 1.9MHz spectrum was $5 billion.

Perhaps Google will think better of it. Or perhaps the FCC will nix the idea of selling usage rights as Google wants to as not being in the best interests of the public.

As it stands now, there are not too many qualifying caveats on those who are allowed to bid on spectrum other than owning a fat wallet.

Posted by Ephraim Schwartz on May 23, 2007 02:07 PM

May 22, 2007 | Comments: (0)

Major revision planned for Sarbanes-Oxley

TAGS: Compliance

By taking a top-down approach to ferreting out fraud, Auditing Standard No. 5 will ease up on IT oversight

On May 24, the Public Company Accounting Oversight Board (PCAOB) will vote on Auditing Standard No. 5. If approved, this new standard for audits of internal control will bring about significant changes to Sarbanes-Oxley regulations, which now operate under Auditing Standard No. 2.

In particular, Section 404 of the Sarbanes-Oxley Act of 2002 requires companies to assess their internal controls over financial reporting and offer an auditor's report on that assessment. To bring this to fruition, Auditing Standard No. 2 was adopted by the Securities and Exchange Commission.

However, in its latest report, the PCAOB admits that although the oversight has "produced significant benefits" with an increased focus on corporate governance, these benefits "have come with significant cost." If approved by the PCAOB, Audit Standard No. 5 will then be sent on to the SEC, which will decide how long the regulation will be open for public comment before it votes on the standard.

The SEC's goal, according to a PCAOB representative, is to finalize the new rules in time for the next cycle of audits of internal controls for fiscal years ending after Nov. 15, 2007.

I spoke with Patrick Taylor, president and CEO of Oversight Systems, which provides security systems for financial business processes.

The purpose of Sarbanes-Oxley remains the same, to identify fraudulent earning and/or fraudulent financial reports. The difference, however, between Audit Standard No. 5 and Standard No. 2 is the approach. And that difference will have an appreciable effect on IT, in a good way.

"From an IT perspective, [Audit Standard No. 5] will take a lot of the bureaucracy out of compliance," Taylor told me. After four years of dealing with the issues surrounding Section 404, the SEC is actually getting more pragmatic.

The PCAOB admits that the current standard encourages auditors to "perform procedures that are not necessary in order to achieve the intended benefits."

Taylor offers a simple example to explain what that means: Under current Sarbanes-Oxley rules, a company must log every transaction the DBA (database administrator) performs. The DBA can't log in to a database without a trouble ticket. So, when the auditors come in, they want to see that someone at the company verified all DBA transactions against trouble tickets, a huge waste of time considering that no one will know whether the DBA, who may have written in his notes that he went into the database to reindex a column, actually performed the task.

Rather than getting lost in minutiae, the new standard will look at the bigger picture. In a sense, the SEC will relax some nitpicky procedures in favor of a top-down approach. Which is probably a good idea, given that the real risk lies at the top. According to an Aberdeen study, 73 percent of all fraudulent activity is initiated by executives and managers rather than the employees who answer to them.

Fraudulent financial reporting most likely stems from someone manipulating the general ledger or during revenue recognition. Because of this, the new proposals will direct the auditor's attention to financial statements and company-level controls rather than "process-level aspects of control."

One more example from the PCAOB proposal that put a smile on my face was the suggested rewording of the definition of a control deficiency from one that is "more than inconsequential" to a "significant" deficiency.

Proof once more that the pen is mightier than the sword!

If you haven't looked at the full full 131-page proposal, I suggest you do so.

ODF vs. OpenXML redux: If you are interested in ODF (Open Document Format) and Microsoft's counter proposal, OpenXML, I would point you to last week's column and suggest that you read the comments from readers. They are thoughtful and raise many good issues that I did not cover when I wrote the original column.

Posted by Ephraim Schwartz on May 22, 2007 03:00 AM

May 21, 2007 | Comments: (0)

Google, Salesforce may make software history

TAGS: SaaS

Reports say Google is about to strike a deal with Salesforce.com. If true, the deal could have far more significance than simply sharing and exchanging mashups.

As big as Google is, it can't change the high-tech industry
single-handedly. But a deal with Salesforce that embeds Google Apps inside the CRM vendor's service could become that moment in high-tech history that changes the way companies think about office productivity applications forever more.

Salesforce could offer its customers a full set of office productivity apps at a low, low price -- as an alternative to using Microsoft Office.

If this were to happen, first impressions are critical, meaning both Google and Salesforce better get all their ducks in a row to ensure that the productivity applications are easily integrated into the CRM application service.

A second requirement to see this take off would be the inclusion of an ironclad SLA [Service Level Agreement] at the same professional level Salesforce offers for its own CRM applications. Google Apps currently has none, other than for Gmail, and that is not enterprise-ready at only 99.9% uptime.

In essence, the integration of office productivity applications with line of business applications would go a long way toward creating the long sought after single desktop view in which users no longer have to punch out to each separate application.

Rather, all applications are simply part of a pull down menu with users accessing each application as if it were just another feature on the desktop.

If every Web-based app came with Google Apps or something like it, perhaps StarOffice, it would give users the interoperability that they can't get now from Microsoft Office easily, unless they turn to SAP, which has an integration deal in Duet with Microsoft.

This deal could turn office productivity apps into a commodity item and make them ubiquitous, in that they would be an expected part of every SaaS service.

Today, every user expects a spell checker as part of their word processor, but some day every user may expect a word processor as part of their CRM, ERP, BI, PLM, or whatever application they use. All of it using ODF as the standard.

If high-tech has taught us anything, it is that nothing stays the same and no one stays on top forever.

The imprimatur of a business application like Salesforce, which is a leader in its market, with the single most popular online application in the history of the Internet, Google, may start as a ripple, but I predict it will end up as a tsunami that could, one day, wash away the largest software company of all time.

Posted by Ephraim Schwartz on May 21, 2007 11:09 AM

May 18, 2007 | Comments: (0)

AmEx takes issue with Purchasing Portal coverage

TAGS: None

In response to an article filed on Tuesday and written by me in which I said American Express will deliver a new consumer service for cardholders called Purchasing Portal that aggregates shopping catalogs and offers to obtain for cardholders American Express's discounted price on items, AmEx is not pleased.

First, let me say I stand by what I said. I know what they told me, and I have the notes to prove it.

Nevertheless, in response to their impassioned pleas and in an effort to show them what a nice guy I am -- and in the hopes that they won't take away my AmEx card -- herewith is their response to my article.

"American Express needs to make a correction and clarification concerning the article you wrote, 'American Express Plans Business, Consumer Buy Site,' and posted this week on www.InfoWorld.com, May 15, 2007. The just-released American Express S2S solutions CatalogPro and Contract Audit and Recovery are designed to help large and mid-sized companies manage and streamline their supply chain and save millions through increasing control and compliance, reducing maverick corporate spending, and recovering losses due to purchases above negotiated pricing. They join our suite of S2S solutions, which includes eInvoice&Pay, an EIPP offering. In addition, CatalogPro is a complement to enterprise eProcurement systems. The other solution mentioned in the story, purchasing portal, will also be a B2B solution but is designed for enterprises without eProcurement systems. An availability date for purchasing portal has yet to be determined. None of these solutions are available to consumers.

"Thank you for clarifying this important point with your readers and other media outlets that have picked up your story."

Okay, I let them have their say thanks to the wonderfully interactive world of blogs. But to repeat, this is not what I was told. In fact, where they say no date has been set, I was specifically given a date of the fourth quarter.

But as is their wont, as it is for most large companies, they claim what I wrote is inaccurate. I believe either the executive who gave me the details is either in trouble or is wrong or they just don't want this announced early. Let's wait until the fourth quarter to find out.

Posted by Ephraim Schwartz on May 18, 2007 01:59 PM

May 15, 2007 | Comments: (0)

ODF vs. OpenXML

TAGS: Standards

Convincing customers they have the better technology is the weapon of choice when it comes to winning business battles in high tech

First let's make one thing clear. At the highest level, ODF (Open Document Format) vs. OpenXML is a battle between two business competitors, IBM and Microsoft, each of which views itself as threatened by the other.

Despite what you read below, this is not a column about technology; it's about business strategy. What may mislead you is that when high-tech companies battle, technology is typically the tactical weapon of choice.

IBM and Microsoft have been in a battle for supremacy ever since they parted ways in 1991 over OS/2 and Windows.

As unlikely as it sounds, the current battle is over an open file format for saving files, ODF or OpenXML, especially for word processing, spreadsheet, and presentation documents but not limited to those.

To see whether I could sort out the differences between these formats, I gave both companies a call.

Supported by Big Blue and many other high-tech companies, ODF is a standard both of the ISO and OASIS, which has about 300 members. OpenXML is supported by a smaller European standards group, ECMA International, which has 21 members, 20 of which voted to make it a standard, with only IBM voting no. OpenXML has also been proposed to the ISO and will be voted on in September.

If OpenXML adoption is preferred, it closes the door on the opportunity for IBM to create a path to a myriad of IBM/Lotus on-premises and Web 2.0 products for such things as collaboration, unified communications, productivity software ,and even its WebSphere middleware platform.

If on the other hand, ODF adoption, especially with government entities, grows over time it could have a viral effect and threaten Microsoft's largest revenue producing product, Office, and help IBM regain market share it lost to Outlook and Exchange Server as well.

To that end, it seems naïve to run stories -- as many publications have, including The Wall Street Journal -- posing as if they have uncovered some horrible truth about Microsoft lobbying legislative entities against adopting ODF as a governmental standard for file formats. This is capitalism. What do you expect Microsoft to do?

The first curious thing I noticed in investigating this file-format battle is that Bob Sutor, IBM vice president of open source and standards, refers to OpenXML exclusively as OOXML.

When I asked Tom Robertson, general manager for interoperability and standards at Microsoft, when one should use OOXML and when OpenXML, he told me to refer to it format only as OpenXML.

In other words, the battle lines even include nomenclature.

OOXML, when said fast sounds awfully like "Uh-Oh XML," while OpenXML sounds far more user-friendly.

Think this is inadvertent? Don't bet on it.

With each side having a great deal invested in gaining the upper hand, "uh-oh technology" is not quite what Microsoft would to want associate with its brand.

Beyond the name-calling, Sutor believes ODF alone offers a way for users to exchange documents regardless of the application used to write them. And it can be done in an editable form, which isn't the case with PDFs, another popular file format.

IBM's Sutor says that, although Microsoft has published all the specs for OpenXML, those specs total 6,000 page (12 reams of paper), which makes it almost impossible for anyone but Microsoft to incorporate the specs in a new productivity suite, thereby crowning Microsoft Office effectually the de facto standard, according to Sutor.

"Microsoft is trying to write a new chapter in lock-in on products using standard as the basis for this," Sutor says, adding that any organization that requires OpenXML -- or as he says, "OOXML" -- will force themselves into a Microsoft-only corner. "While it will be theoretically possible to do another implementation, it won't happen."

The best analogy I read was one that said Microsoft Office is like prescription medicine and ODF is the generic version.

Microsoft's Robertson and Jean Paoli, general manager for interoperability and XML architecture at Microsoft, see it quite differently.

Robertson says that despite 6,000 pages of documentation there is already an implementation from DataViz for Palm OS, one by a company called Numeric for spreadsheets, that Novell has an implementation of OpenXML for OpenOffice on Suse Linux, and that Corel has announced an implementation for WordPerfect. "Sun is working on an implementation as well," Robertson says.

Paoli says ODF reflects what OpenOffice can do. OpenXML reflects the capabilities that Microsoft Office has.

As far as those 6,000 pages of specs is concerned, there are 350 pages in the OpenXML spec alone -- half of the entire ODF spec -- just to describe spreadsheet capabilities, which ODF doesn't have, Paoli says. For example, ODF can't describe or calculate a formula in a spreadsheet.

"It may sound amazing. They are working on it now. But the current standard doesn't have it," Paoli tells me.

In addition, ODF is not backward-compatible with Excel -- or any other Office file format -- so you can't migrate old Excel files to ODF.

"The Office plug-in from OpenOffice does not support that," Paoli says.

Robertson and Paoli gave me many more examples, to the point that they say OpenXML and ODF are not even competing products, like in the way HTML does not compete with PDF.

Integration with other business data is more problematic with ODF, Robertson adds. OpenXML reads custom schema so that a program can identify the kind of information that is inside a document in order to send it to a back-end process and reuse it, say, for an ERP system. Because OpenXML can define and understand the structure of data, it can pull data out of a document and map it to populate a database.

"You cannot do that with ODF," Roberston says.

Interestingly, both sides see the differences between the two formats as a matter of offering more choice to the user, and both Sutor and Robertson used those words to describe why their format is best.

"Governments need to choose the format that meet their needs." I don’t know who said that, but both believe their solution meets that requirement.

Where do I stand? Well, at the risk of getting a lot of hate mail saying I am in Microsoft's pocket, if what Robertson and Paoli say about OpenXML and ODF is correct, then I think OpenXML is needed, at least until ODF becomes backward-compatible with older Office file formats and offers the capabilities large organizations require in their productivity solutions to run their business.

What you shouldn't expect is any meeting of minds between the two companies. However, while this may appear to be a battle to the death, I don’t see the fight over file formats as Armageddon. That will have to wait for another day.

Posted by Ephraim Schwartz on May 15, 2007 03:00 AM

May 08, 2007 | Comments: (0)

SAP draws a line in the sands of the Middle East

TAGS: None

We all know that much of Asia is booming -- manufacturing, outsourcing, and, I suppose, capitalism in general is reinvigorating many economies and, it is to be hoped, raising the standard of living of its populations.

See my Reality Check blog, The Truth About China.

With that in mind, I asked Hasso Platner, founder of SAP, if he saw any signs of high tech life in the Middle East.

My thinking was that if companies in the Middle East require the kind of software and technology that SAP offers, it might be a leading indicator of change taking place in that part of the world.

Platner's answer surprised me.

"Many, many years ago I made a decision that we don't go to the Middle East directly. Actually we sold the label SAP to an organization which is serving from Morocco to Iran. East of Iran SAP starts again and west of Morocco is the ocean.

"The whole Arab world, the whole Middle East excluding Israel, is not served by SAP."

I asked the next obvious question.

"Why not?"

"We didn't want to go there...."

Considering past history, Germany, Israel, and the Arab world is a very sensitive issue and would require a very long blog with many, many comments. So I will just say, you can draw your own conclusions as to "why not?"

However, as far as I can tell Platner's business philosophy is at least in part based on what he believes is the right thing to do.

This is in sharp contrast to companies like Yahoo, which is willing to turn over the names of dissidents in China to the government-- "we adhere to local laws" --for the sake of a profit.

Posted by Ephraim Schwartz on May 8, 2007 03:20 PM

May 08, 2007 | Comments: (0)

Telcos to tap Web surfing

TAGS: Privacy

E.U. anti-terrorist directive adds Web browsing to the data retention list

The European Union Directive 2006/24/EC will take data retention for telecommunications a step beyond where governments have ever gone before.

I learned of this directive by way of a press release from Hewlett-Packard announcing that its Dragon solution "leverages 30 years of experience in telecom networks and 10 years of experience in the retention of call detail records" to make it all happen.

The point of the E.U. directive is to prevent and detect major criminal activity, as defined by each member of the E.U. individually.

I suppose there is no immediate worry that this data might be misused or that mistakes might be made. Consider that one of the first countries to implement a version of the program using Dragon is that bastion of democracy, Turkey.

Essentially the directive will require E.U. members to retain CDRs (customer data records) for six months to a two years, again up to the individual country.

A CDR in the old days included data on when a call was placed, from what number to what number. Also recorded -- all for billing purposes -- was the duration of the call. As technology progresses it now includes unanswered calls, such as messages left on voice mail or even calls that triggered call-waiting but were not picked up. For mobile telecommunications, the E.U. directive will require location information as well.

Similarly, under the Community Assistance to Law Enforcement Act and the Patriot Act, the U.S. also requires its carriers to retain CDRs for all of the above as well as VoIP calls.

The goal, according to John Pescatore, senior vice president at Gartner and a former member of the FBI and NSA, is to monitor communications. However, a net cannot be thrown over all the data allowing law enforcement agencies to fish for suspicious patterns. Agencies must have a specific caller/criminal in mind and then use the retained data on that person to look for patterns in his or her communications activities.

Of course, the net can get pretty wide, Pescatore says. If you have someone in mind and you monitor that person's incoming and outgoing calls, say from 25 callers, then you can take it to the next level and see who those 25 callers also called. I don't know how far the net can be cast before the courts -- if the courts are asked -- say you can't go there.

Where the E.U. directive takes an additional step is in monitoring all IP traffic. That includes SMS (short message service) and MMS (multimedia message service) messaging and Web browsing. European telcos will be required to retain the IP address, as well as when a user logged on and logged off every site. All the information apart from the content will be retained.

My first question is, Is Web browsing really a form of communication? It is now.

Another question one might ask is, Do universities fall under the law for data retention as if they were a telco, assuming they provide students with VoIP services on campus? That could get quite expensive for the university.

Certainly, HP has got a good business going on here. Nigel Upton, the Dragon general manager, told me in a trial HP helped a telco in Italy retain more than 450 million CDRs per day. If stored for 12 months that comes to 35TB of data. The Dragon system runs from $1 million to $5 million, depending on the size of the market.

"It is a $1 billion market in Europe just for the telephony piece," Upton said.

Can the system be misused? Pescatore says his biggest worry is that some politically motivated but authorized entity will decide to use this against its enemies.

"How to prevent it being used for political purposes is the problem," Pescatore told me.

Is the next step data retention of the actual content of calls? Barring another major terrorist attack, Pescatore doubts it. Well, that's a load off my mind.

Notice that the question of content is irrelevant when it comes to Web browsing because to have the URL is to know the content.

For me, a person who enjoys and admires technology, all of this lacks one key component. Yes, technology is extremely powerful and can do almost anything you want it to do. However, it is without a conscience. It is up to users of technology to add that one missing ingredient.

Posted by Ephraim Schwartz on May 8, 2007 03:00 AM

May 02, 2007 | Comments: (0)

Beware the Mob - What happened to Digg could happen to you

TAGS: Blogs and blogging

In what can only be described as a lynching of an Internet site, Digg, the online site for and by the people, was taken over this week by a mob, albeit it appears to be a completely self-organizing mob, that kept posting stories that included the key to break a digital rights copy protection code built into HD-DVDs and Blu-ray discs.

According to our IDG News Service Digg Bends to Users Will on AACS Encryption Key, "the company began removing the posts after it received a cease-and-desist letter from another company claiming these posts violated its intellectual property rights."

As far as can be determined, those who posted were not part of some officially organized effort but rather fed off one another as the posting momentum grew. No sooner would Digg take down one post than someone else would put up another post that included the key.

Attempts to game automated Internet mechanisms are nothing new. Companies that wanted to raise their Google search profiles, for instance, are constantly stuffing keywords into their opening paragraphs or metadata in order to move up the rankings.

Howard Stern tried to aid and abet a Web site that exhorted American Idol fans to vote for Sanjaya, even though his singing skills are well below par.

Now we have the even scarier phenomenon that took place on Digg. Citizen journalism, as I wrote about it last week (Beware Mob Media) is one thing. But now we see this idea taken to its illogical conclusion.

While some may hail the idea of "the people" forcing Digg to surrender and say it would not take down the posts even if it potentially means its own demise, the specter of the owner -- who in a sense is just like the owner of a brick-and-mortar store -- having to acquiesce to an unruly mob that doesn't like what the store is selling or not selling, bodes ill for the future and the value of the World Wide Web.

I don't see this as a victory for the people. In my previous blog post on the subject, I cited examples of the dangers of a mob mentality. Here is yet another.

Let's look beyond the issue of digital rights management. Instead of praising this as a victory of the people over the giants of Hollywood and the recording industry, we should consider the bigger issue of what keeps a democracy intact.

A large part of that is, I believe, the willingness of all of us to accept and follow the rules. The old cliche that says your freedom stops where my nose begins, was never more important than today.

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Posted by Ephraim Schwartz on May 2, 2007 11:08 AM

May 01, 2007 | Comments: (0)

Online publications shifting to being marketing-driven?

TAGS: None

A not so subtle shift is taking place in online publications that is worth noting and worth watching.

Here's a link to a podcast that discusses this very issue, "Journalism and Marketing." In the old days, maybe two or three years ago, the ratio between edit staff and marketing staff was easily five to one in favor of editorial. Probably higher at many publications.

But as pubs like InfoWorld try to get their online sea legs, mainly to discover what readers want, a dramatic shift in new hires is taking place.

After a round of calls to numerous pubs, I see the story is the same everywhere. The shift away from editorial staff to marketing staff is happening across all Internet publications.

This is greatly facilitated by the ability to put up user-generated and even vendor-generated content.

One editor who dare not be named told me "vendors want more custom content."

"What do you mean by custom content?" I asked. "Advertorial," was his response.

The repercussions of this are still hard to gauge. But one reporter I spoke with put it best when he said, "It will take longer to find the truth."

In other words, there is so much marketing influence out there, and it is getting so strong, it will take more digging and more surfing the Web to separate fact from fiction.

Happy hunting.

Posted by Ephraim Schwartz on May 1, 2007 11:21 AM

May 01, 2007 | Comments: (0)

The truth about China

TAGS: Global IT

China is looking to be more than just a strategic solution for low-cost labor arbitrage

Way back in the day, the term "old China hand" referred to a diplomat or journalist who had spent years stationed in China and, as a result, understood Chinese culture, politics, and ways of doing business.

This week I spoke with two of what I would call "new China hands," Matthew Growney and James Popkin. Growney is executive vice president and chief strategy officer of DarwinSuzsoft, a staffing company that merged U.S.-based Darwin Partners with China-based Suzsoft and has headquarters in both countries. Popkin is group vice president and research fellow emeritus at Gartner. He co-authored IT and the East with Partha Iyengar, also a Gartner vice president.

Growney and Popkin offer different but complementary views of China. Growney has a feet-on-the-street perspective, while Popkin takes a high-level view of Chinese business. Together they help give a more complete picture of what is happening in China and how it will affect IT in the States.

DarwinSuzsoft has six offices in China, each with its own domain expertise and access to a different labor pool. The office in Suzhou province, for example, employs about 800 people and has access to 150,000 computer science graduates annually in Suzhou province alone. To get a feel for the scope of how big China is, the government recently completed a two-year project that built a million housing units. These units are located in what Growney calls an office park where DarwinSuzsoft is also located. The government pays the mortgage for workers, giving them a 70- or 99-year lease, and pays for their commute to and from work as well.

Now, if the wage rate for a standard software developer in India is a fourth of what it is in the States, a Chinese developer gets about an eighth. So, if the U.S. rate is $100 per hour, it is $25 per hour in India and $11 per hour in China. For a Java developer in China, the hourly rate is $7 to $9. For BPO (business process outsourcing), where a minimal level of education is required and the job is basically data capture and data entry, the rate is $2 to $3 per hour.

While China's outsourcing capabilities are increasing, the Indian market is decelerating, Growney says. The turnover rate is as high as 30 percent to 50 percent at some Indian outsourcing companies, and wages are spiraling upward.

"You have so much wage creep and turnover it is killing them," says Growney. In fact, Indian companies have started to call DarwinSuzsoft asking if they can outsource to it.

With that kind of marketplace available to enterprise companies, I asked Popkin, should current U.S. IT professionals throw in the towel? Should U.S. college students avoid becoming computer science majors?

In answer, Popkin notes that the U.S. economy has survived at least three waves of globalization so far. First we saw semiconductors go to Taiwan, then automotive and electronics to Japan, and then manufacturing to China. We're now experiencing a fourth wave, with IT services and app development moving to India and China.

Despite this Popkin is optimistic, as there are a number of factors that have helped the U.S. economy survive these economic tsunamis.

"We go toward the higher value-added," Popkin said. Take steel, for example. China, Korea, and Japan are now major steel producers, but we own the specialty steel market that uses exotic mixtures of metals and chemicals. The U.S. has also pioneered new industries such as biotech and nanotech.

Not only that, but our population keeps growing, creating domestic demand, and we maintain an entrepreneurial spirit, which is in turn financed by venture capitalists.

According to Popkin, the U.S. has the capital markets and infrastructure to remain competitive in IT -- with the infrastructure being the Silicon Valleys that dot the map and become hotbeds for new ideas.

But make no mistake, China and India will be tough competitors, Popkin says, citing another example from the steel industry.

Tyson Krupp, one of the largest steel forgers, looked at China and India as areas for future growth. But instead of finding customers in those markets, it found India and China creating Bharat FAW, which would become Tyson Krupp's largest competitor.

IT will be no different. Indian companies are localizing products and learning to develop into multinationals that offer competing services at lower prices. In China, the story is similar. For example, Huawei, a manufacturer of routers and telecom equipment, owns 1,000 patents, has 8,000 patents pending, and employs 17,000 engineers. In 2005, a state-owned Chinese bank extended a $10 billion line of credit to Huawei. Huawei is on the verge of supplanting Cisco as the lead supplier to China of networking equipment.

In IT software and services, where patent infringement remains an issue, Chinese companies are hoping to allay enterprise fears about IP (intellectual property) protection by bidding on complete IT solutions and services that include the software, the service, and customization and maintenance. This way they can not only provide themselves with a larger revenue stream but they can ensure that parts of their business will remain viable in the event that other parts are found to be using unauthorized technology.

China will not be satisfied at being the strategic solution for low-cost labor arbitrage, Popkin says.

However, it is not all smooth sailing for China.

Government involvement in the economy can be a plus, as in the case of Huawei, but it also creates a critical uncertainty for customers and China's own future growth.

"I'm not simply talking about Communist control, but what we really have to look at is the level of government ownership of private assets. This will have a dampening effect on innovation," Popkin says.

For example, the government of Shanghai owns 700 businesses worth $16 billion. The joint venture between GM and Shanghai Automotive Industry Corp., actually the government of Shanghai, is an example of problematic government involvement. Imagine, says Popkin, a GM competitor wanting to compete in Shanghai and having to go to the city for all of its permits.

But does the rise of China mean the decline of America? I asked. "No," says Popkin.

"Wealth generation is not a zero-sum game," he says. "It is something that can occur across multiple countries. Their gain is not our loss."

Amen and hear, hear.

Posted by Ephraim Schwartz on May 1, 2007 03:00 AM