'Blogroll' Archive
Last week’s introduction of the T-Mobile G1 smart phone was the first rollout of a wireless phone designed with the open-source Android mobile device software tools created by Google. T-Mobile USA will make the G1 available October 22, and the phone will be marketed worldwide by T-Mobile International.
The G1 is made by a Taiwanese company, HTC Corp., and is built around an applications processor chipset designed by QUALCOMM. This is the first consumer product to emerge from Google’s formation of the Open Handset Alliance last year. It won’t be the last.
What the search giant has done is something that could ultimately loosen the stranglehold that wireless communications carriers have on American consumers. For years, AT&T Mobility, Sprint, Verizon Wireless, and the like were the gatekeepers for the US mobile phone market — deciding which handsets would be sold and at what prices, dictating service plans, and keeping monthly bills high. The wireless handset makers (principally LG Electronics, Motorola, Nokia, Samsung Electronics, and Sony Ericsson) and consumers were completely at their mercy.
The Apple iPhone helped crack the wall of wireless communications. While it initially went with just one carrier in the US, AT&T, Apple broke the rules by selling the iPhone in its own retail stores, and at prices it determined. The new iPhone 3G backslides a bit on the price-setting issue, with AT&T getting more power on that point as it locks iPhone buyers into two-year service contracts.
The Open Handset Alliance helps break the grip of the wireless carriers. Android-based mobile phones will go the iPhone one better by offering an open-source applications “store” that won’t be under the control of one company (not Google, nor any other), as Apple’s App Store is. Where it’s leading is the day when you can buy a wireless phone anywhere you like, such as Best Buy or Wal-Mart, and then pick which wireless carrier you want to use. It won’t be a “take it or leave it” proposition, which is what you get from the wireless carriers these days, and that will be a better day for consumers — not only in the US, but around the world, in time.
Hostile takeovers have never been common in the high-tech industry, but they’ve become more frequent since Oracle was able to roll up PeopleSoft in 2005.
The semiconductor business now is witnessing two hostile takeover bids. You may have seen that Samsung Electronics is targeting SanDisk; more on the other one below.
As others have noted, hostile takeovers in technology are uncommon because so much of the business is dependent on the human talent, which can vote with its feet at any time. You can buy a company and possess its physical assets, such as office buildings and wafer fabrication facilities, but your chip design engineers are free agents who can pick up and leave for greener pastures, along with any executives and middle managers without employment contracts. In the US, most employment is “at will” and can be terminated by the employer or the employee whenever they choose.
This year has seen a couple of unsolicited acquisition bids flame out for various reasons. Microsoft was unable to come to terms with Yahoo!, even after increasing its offer. Electronic Arts this month finally gave up on pursuing Take-Two Interactive Software. Elsewhere, United Technologies officially still has an offer out there to buy Diebold, but UTC chairman George David recently told analysts that his company is less likely to purchase the ATM maker, a prospect Diebold rejected.
Samsung Electronics hasn’t previously pursued a hostile takeover of an American company; it rarely makes any acquisitions, period. The memory chip giant, which also provides a variety of consumer electronics products and home appliances, was in talks for more than three months on a possible combination with SanDisk, which makes portable data storage drives, music/video players, and other products based on flash memory devices. The two companies were also wrapped up in negotiations over patent licensing that have dragged on for more than a year.
Samsung’s cash offer to buy SanDisk, worth nearly $6B, sounds like a lot of money, but SanDisk would have commanded a much bigger price in 2006 and 2007, or even four months ago. In rejecting Samsung’s bid, SanDisk suggested that Samsung’s acquisition offer is just a negotiating ploy in the licensing talks.
Toshiba may emerge as SanDisk’s white knight in this drama. The electronics behemoth enjoys a close manufacturing partnership with SanDisk (the companies share production of flash memories from four wafer fabs in Japan, and they plan to build a fifth fab together), and Toshiba Semiconductor is the world’s second largest supplier of NAND flash memory, the chips that store data in MP3 players, wireless phones, and other popular electronics products. (Samsung is number one in that market.)
Seagate Technology is also being mentioned as another potential savior, possibly because the combination of SanDisk with Samsung or Toshiba could set off antitrust alarms around the world, but CEO Bill Watkins said he wasn’t interested in buying SanDisk.
Meanwhile, there’s another hostile bid going on in the semiconductor industry that’s getting a lot less attention in the blogosphere and the mainstream media. Vishay Intertechnology wants to buy International Rectifier (IR) for almost $2B. Who? What? These two companies, while decidedly obscure to consumers, make electronic components that likely are in any electronics you own. They are big suppliers of passive electronic devices, which regulate electrical power, store electricity, and perform other important electronic system functions in cars, computers, phones, and many other products.
Vishay made its bid for IR shortly after TDK agreed to buy EPCOS, the world’s second largest manufacturer of passive electronic components. TDK may be famous for blank cassette tapes and computer disks (all of which are actually marketed by Imation now), but its sales are dominated by electronic materials and components, and Vishay doesn’t want to get left in the dust by the EPCOS-TDK combination and their mutual competitor, Murata Manufacturing.
No one can accurately predict how these bids will unfold, so stay tuned.
The FDA, seeking to build up its reputation for protecting the public, is asserting greater authority over drug imports, and the target this time is Indian pharmaceutical firm Ranbaxy.
India’s top drugmaker has made headlines several times this year. In June, it agreed to sell a majority of its shares to Japanese firm Daiichi Sankyo. The following month brought the news that the Department of Justice is investigating the possibility that Ranbaxy sold substandard drugs in the US and other markets.
This week’s announcement that the FDA has banned some 30 generic products manufactured at two of Ranbaxy’s facilities in India casts an even wider shroud over the company’s recent success in the generic drug industry. According to the FDA, the Ranbaxy plants have failed to meet good manufacturing standards during inspections. And although none of the drugs recently sourced to the plant have come up contaminated, the FDA intends to ban imports from those facilities until the company meets standards.
Ranbaxy is understandably displeased that its name is being raked through the mud, and it has even hired former New York Mayor Rudy Giuliani’s consulting firm to help it resolve the FDA’s issues. The company seems to think it was already addressing the FDA’s concerns, but the FDA started warning Ranbaxy in 2006 and obviously felt that the changes it requested were not being made quickly enough.
Recent concerns over contaminated imports require response, both to solve the problem and to reassure American consumers that the FDA is on the job. Ranbaxy appears to be the perfect target, with its growing size and recent allegations of substandard products.
It may be that the regulatory agency is looking to make an example of Ranbaxy, or it may be that Ranbaxy is truly the most heinous offender –- either way, the case should spur other drug importers to improve their processes or face losing US revenues.
Maybe you saw it over the weekend. Fresh on the heels of its “Mojave Experiment” marketing ploy for Windows Vista, Microsoft just started running its first TV commercial featuring Jerry Seinfeld and Bill Gates.
The commercial is decidedly Seinfeld-esque, to say the least. Like the Seinfeld show, some people will find it rich in popular culture-based humor and non sequiturs, while others will find it confusing and not funny.
Many wonder how this commercial promotes Windows or Vista. In truth, it really doesn’t. As this blog post notes, the 90-second spot is meant to introduce a series of commercials starring Gates and Seinfeld, and I’m sure they’ll get around to mentioning Vista at some point.
Meanwhile, there was a spate of news stories marking the 10th anniversary of Google’s incorporation. All the search giant has to do is to get older, and the media’s all over it! BTW, Microsoft is nearly 33 years old (not much younger than when a certain stand-up comedian launched a TV series called The Seinfeld Chronicles).
Google got a lot of attention last week for launching Google Chrome, its open-source Web browser. Chrome will compete with not only Microsoft’s Internet Explorer, Apple’s Safari, and the Opera browser, but also Firefox, Mozilla’s open-source browser that has benefited from a lot of financial and technical support from Google. The search behemoth just renewed its development agreement with Mozilla for another three years, so Chrome may not crush Firefox in the near future.
Chrome is intended as a key piece of infrastructure for Google’s Web-based tools, such as Google Docs, Gears, and Gmail.
I wouldn’t put all my chips on Chrome to overtake Internet Explorer or even Firefox in the next few years. Not everything Google touches turns to Internet gold. Google Video wasn’t a world-beater, so the company went out and bought YouTube.
Funny how Google doesn’t run any TV commercials — all it has to do is to inadvertently spill the news of the new browser, and the media goes wild in promoting the (free) product. Of course, there was a lot of savvy marketing and PR work behind that “accidental” launch. The kind of thing you’d expect from a brash 10-year-old.
Money and politics go together like cookies and milk, unless you’re apolitical or lactose intolerant. As the Democratic National Convention winds up in Denver and the scene moves on to the Republican National Convention in St. Paul, technology titans are making their presence felt on the national political scene.
The most obvious manifestation of the phenomenon is the Big Tent, which actually is a big tent (8,000 sq. ft.) put up for the use of bloggers and others at the two conventions. The amenity-packed facility is sponsored by Google and YouTube, along with Digg. Bloggers were first credentialed at the national conventions four years ago, and now they’re ubiquitous at the political confabs, with many of them deliberately choosing to stay out of the convention halls (where the speeches and activities are meant for the consumption of TV cameras) and to follow the action everywhere else in the vicinity.
The high-tech industry steered clear of the Beltway for decades, feeling it didn’t need to indulge in grubby lobbying with Congress and the federal bureaucracy. A number of issues, however, have forced industry figures to get down and dirty with the likes of AARP, the National Association of Manufacturers, the National Rifle Association, and the US Chamber of Commerce in making sure their interests are represented on Capitol Hill and elsewhere in the District of Columbia. Intel, for example, spent $500,000 in Q2 for lobbying the Department of Commerce, the Federal Trade Commission, and other agencies.
One hot-button topic is Net neutrality. Online content providers, such as Yahoo! and YouTube, are vitally interested in making sure their users are unfettered by any restrictions on access and downloading, while Internet service providers, such as Comcast and Verizon, see some customers of theirs engaging in high-volume swapping of files and want government regulators to let them limit those customers or even to charge them more.
The R&D tax credit is another issue that raises the blood pressure of executives in technology, especially those in the semiconductor industry. Chip makers typically spend about 20% of their annual sales on R&D expenditures. Any hint that Congress is or isn’t going to revive the R&D tax credit brings this corporate pocketbook issue to the fore.
The conventional wisdom is that techies tend to vote Democratic. It ain’t necessarily so. There is a very strong libertarian bent to the industry. Electronics engineers and executives may not vote in large numbers for candidates of the Libertarian Party, but their limited-government philosophy attracts them to candidates like Representative Ron Paul, who was running for president among the Republican field this year and was the Libertarian nominee for president in 1988.
Tech CEOs, in their personal economic interest, are often closest to the Republican Party. Meg Whitman, the former CEO of eBay, is reportedly considering running as a Republican for governor of California in 2010. Carly Fiorina, the controversial ex-CEO of Hewlett-Packard, is a business and economic adviser to Senator John McCain and is rumored to be on the inside track for a top post in a McCain Administration, perhaps even as vice president.
Whitman and other high-tech execs hedge their political bets by giving to both Democratic and Republican politicians, pragmatically recognizing that one party isn’t going to control the White House or the Congress forever. Regardless of who wins the election in November, the technology industry will be pressing its case with donations and lobbying in 2009 and beyond.