News and Analysis to 20th July 2006
Microsoft achieves EU first
Unfortunately this relates to Microsoft’s decision to
ignore the ruling of the European Competition Commission to open up its
software to competitors. This is the first time in the 49-year history of the
European Union that the Commission has had to fine a company for
non-compliance. The fine is currently 280.5m euros, and will grow at a rate of
3m euros per day from 31st July if Microsoft continues to ignore the ruling.
Microsoft appears to be playing an impressive game of brinkmanship. Possibly it
has a fiendish plan? Moving Bill Gates out of the day-to-day business might be
related, as might the delayed release of Windows Vista. Alternatively it could
be planning to ‘encourage’ the EU to review its ruling by revisiting the
pricing model currently used by the EU to purchase the recalcitrant IT giant’s
software.
When in roam…
The EU Commissioner for Information Society and Media has
announced plans to cut international roaming charges in Europe by up to 70%.
This will not apply to text messages. The government interventionalists believe
that lower prices through regulation will increase competition and benefit the
customer. Whilst the Darwinists believe that the absence of regulation will
increase competition and benefit the customer.
Perhaps a compromise would be to regulate the EU Commissioner? That way
we could be assured that any EU-generated regulations are not optimised for the
needs of the most influential players.
HP breaks out in spots
Researchers at HP have recently announced a tiny wireless
chip that can store up to 100 pages of data and transfer it at 10 MB per second
wirelessly. Sounds like RFID on steroids. This could yield such applications as
intelligent paper, where document corrections could be stored for future
reference, or for storing health information on medical wrist bands, including
X-Rays and video. The so-called Memory Spot is smaller than a grain of rice.
Whilst is some years off commercialisation it is anticipated that production
costs could be as low as 10 cents. Spot is a dangerous term from a marketing
perspective. Will a tightly knit network of Memory Spots be known as a rash?
Team malware
According to anti-virus software vendor McAfee, malware
software development is maturing from a solo sport to one where malware writers
are teaming up and adopting professional software development practices. The
aim of which is financial gain, whether this be through distributed denial of
service attacks or adware/spyware software. This might ultimately benefit
society as a whole. The malware vendors will hopefully raise the game in terms
of software development across the IT industry, particularly in those vendors
whose poorly written software provides fertile environments in which malware
can flourish. The alternative is that the risks associated with using the World
Wide Web will outweigh the benefits, leading to its collapse.
Intel management miniaturisation
The growth of Intel’s management structure appears to have
grown faster than the rest of the business.
Consequently 1,000 management jobs are to be cut. This is all part of
CEO Paul Otellini’s swingeing measures to make Intel a more agile organisation.
Recent market gains by rival AMD coupled with poor financial results have led
to some serious market-pleasing action. These measures are part of an
initiative that could result in up to 15,000 job cuts (15% of the workforce).
If you feel your own management are a little too hands-off, then give Intel’s
HR department a call. There may never be a better time to acquire ‘micro’
managers.
Disappointing results
Sap’s stock price fell 8% on news that its preliminary
second-quarter results indicated that the European software giant would grow
only 8% in respect of licence revenue (planned forecast was 17%). This will
hurt Sap as it coincides with Oracle’s impressive performance despite having to
digest PeopleSoft, JD Edwards and Siebel. On the storage side EMC appears to be
storing up problems by missing its financial guidance for the second quarter in
a row. Its share price consequently dropped 7%. Intel-irritant AMD again
disappointed with a downward revision to its quarterly revenue outlook. Perhaps
its relatively good recent performance when compared to Intel cushioned the
share price, which dropped circa 1%. This doesn’t add up to a tech sector
meltdown, but it does indicate that investors are perhaps overly sensitive in
respect of hi-tech shares. To some extent bad news for these key players is
good news for the industry. Myopic investors subjected to a continuous stream
of good tech sector results might well get over excited and precipitate the
next dotcom frenzy.
Infosys defies bombers
Despite the recent horrific bombings in Mumbai the market
has not lost confidence in India’s IT off shoring sector. The share price of Infosys, India’s second
largest IT company, leapt up 7% recently after it announced its first quarter
results. Revenues were up 39% quarter-on-quarter and net income up 43%. This
triggered Tata’s shares to rise 7%, with Wipro and Satyam both rising 4%. It
would seem that global terrorism is already factored into Indian tech sector
share prices.
