News and Analysis to 2nd March 2006
Google falls to earth
Well that is what the investors presumed when Google’s CFO
implied that their advertising revenue growth may continue to slow, forcing
Google to look elsewhere for gains. This caused the share price to tumble 13%
(the equivalent of several billions) in morning trading as tech investors ran
for cover. The smarter investors would have got out of bed around lunchtime and
increased their Google holdings. No tech company since Microsoft has developed
such a power base in the IT industry. One would expect its growth to eventually
flatten out, so the CFO’s comments are not a great surprise. This jitteriness
suggests that cash rich knowledge poor investors are driving market sentiment.
Cab and Wire?
Once great telecoms player Cable and Wireless announced that
it intends to cut over half its UK workforce over the next 5 years. Its CEO
John Pluthero apparently sent a memo entitled ‘Our business today - in bad
shape’, which included “"Congratulations, we work for an under performing
business in a crappy industry and it's going to be hell for the next 12
months." Probably this is an exercise in positioning bad news. Can we
expect an email entitled ‘Aren’t you the lucky one?!’ which opens up with
“You’ll be relieved to know that we are liberating you from this nightmare of a
company”, which will go out to over half the staff?
Chinese initiate Balkanisation of the Internet
According to the Chinese Ministry of Information Industry,
China is set to divorce itself from the Internet. More specifically it intends
to not use the American-run domain name system ICANN. This was threatened at a
recent United Nations gathering. Some Middle Eastern countries could take the
same approach. If this is the case then it will be possible for there to be for
example two Microsoft.com domains; the existing one, plus another one that is
used when surfing within China. Marketing departments beware.
US Gooovernment. Not
Google is playing hardball. It has rejected a request from
the US Department of Justice to hand over records of web searches. This relates
to the US Child Online Protection Act. AOL, Microsoft and Yahoo have already
complied. Google is nervous that what the US Government is asking for is one
step from demanding the revelation of Google’s search algorithms, which are
highly proprietary and secret. Would Google similarly play hardball with the
Chinese government with whom it has recently agreed to launch a product that
will respect government-imposed content restrictions? Is it actually in
Google’s long term interest for there to be more than one Internet (See above)?
Poisoned Apples
Those ‘good karma-free’ virus writers have turned to
in-vogue fashion accessory vendor Apple. Is this a sign that Apple is gaining
enough market share to warrant the attention of virus writers? Or is it
evidence that when it comes to operating systems, Apple’s Mac OS is just as
vulnerable as Microsoft Windows?
Volatile memory?
First we had the computer chip and then the memory stick.
Now we have the Gaza Strip. Chipmaker Intel has decided to set up an IT
education center in this volatile region. The aim is to capitalize on the high
unemployment amongst Palestinians in this area and educate the labour force to
stimulate the creation of a local high-tech industry, which in turn will
trigger a demand for Intel’s chips. Intel has also announced its intention to
build a factory in Vietnam. The world is changing. Will Silicon Valley lose its
tag as the epicentre of IT? In a few years will IT be centred on the Silicon
Strip or in the Digital Delta?
