SWIFT Bank Network Taps Crowdsourcing

Staid bankers are embracing the latest collaborative tools to drive innovation. The Society for Worldwide Interbank Financial Telecommunications (SWIFT), a global organization that handles an average of 15 million standardized financial transactions such as wire transfers every day for more than 8,000 banks, is spearheading a drive to “inject an innovation culture not only at SWIFT but the financial community as a whole,” by collaborating on new e-banking solutions and working more closely with start-ups, says Kosta Peric, head of innovation at SWIFT.

Since 1973, Brussels-based SWIFT has provided a shared worldwide data processing and communication link for the world’s banks, using a common language for international financial transactions. Its main function is to be a carrier of messages. It does not hold funds, manage accounts on behalf of customers, or store financial information on an ongoing basis. That said, SWIFT is increasingly taking on the role of a catalyst to bring the financial community together to work collaboratively on market practice, standards, and issues of mutual interest.

With that goal in mind, Peric is behind an online marketplace called Innotribe that went live on Feb. 11 and aims to leverage the collective creativity of the finance sector. The idea is not only to deliver on the traditional mission of lowering costs, reducing operational risk, and eliminating inefficiencies, but also to get creative about taking the sector into entirely new directions.

Innotribe is clearly not your father’s banking communications platform. Bankers who wish to submit their ideas for new products, services, or business processes (or enhancements to existing ones) can do so by signing in with a Facebook, Google, or Twitter account. They are greeted with the message “Remember, everyone is an innovator; and a crazy idea that works is not so crazy at all. Share with us your ideas, be they matter of fact or wildly aspirational.”

The site uses a cloud-based software application from Brightidea.com to collect, track, and manage ideas. It also allows those participating in the project to volunteer to work on particular projects and vote on which ideas should be considered for investment and developed to the proof-of-concept phase.

"What we are doing is enabling collaborative innovation," says Peric. That includes embracing crowdsourcing and mash-ups—technology approaches more often associated with start-ups targeting the under-30 crowd than staid bankers.

Peric and his five-person innovation team started out two-and-a-half years ago as a research and development unit. After little more than a year they began encouraging others inside SWIFT to collaborate on new projects. Teams of SWIFT employees were asked to solve particular problems. They were given one month to work on their ideas during their free time, such as lunch or coffee breaks. When the deadline arrived, the proposed solutions were passed to Peric's team. A jury of executives voted on which ideas they liked best. The winning ideas were then implemented on the company's time.

Based on the success of the in-house collaboration, SWIFT decided to involve the wider banking community. During its annual Sibos conference in Hong Kong last September some 6,000 delegates were asked to generate ideas in three different areas—crowdsourcing, mash-ups, and cloud computing, which allows the shifting of computing tasks and storage from local desktop PCs and company servers to remote systems across the Internet. About 500 people showed up to learn more. A core team of 40 delegates met for two hours a day during four days to flesh out concepts and develop pitches that were then delivered publicly to a jury.

One of the winning ideas is called "eMe," a cloud-based project that would allow banking customers to establish a digital lockbox with sensitive personal or business information, such as credit card numbers. Instead of having to type in the information each time a consumer or business makes a purchase, a code could be given to the digital lockbox. Click here to watch a video of the original eMe pitch. Another winning idea, with the working title "eBiz," involves creating a central electronic point where information could be retrieved by businesses about the status of shipped goods.

SWIFT is exploring the idea of co-investing in the development of the "eMe" and "eBiz" projects alongside some of the banks that are its clients. Working with startups is the next step. "We are not yet working with startups but we want to engage with them," says Peric. "It is very much in line with our open collaboration concept—there are lots of ideas out there that are relevant to the financial community so we want to make our SWIFT brand known in this context."

To help spread the word SWIFT has become a sponsor of a global competition called Innovate! 2010 launched by the Guidewire Group, a market intelligence and advisory firm, to identify and accelerate the world's 100 top technology, media, and telecommunications startups. (Click here to learn more about Innovate! 2010). Peric says he hopes to give at least one of the winning startups from the Innovate!2010 contest some exposure at SWIFT's next Sibos event, which will take place this October in Amsterdam.

Start-ups with technologies relevant to the financial industry should pitch directly to SWIFT or through the Innotribe Web site. "We guarantee the request will be acted upon," Peric says.

Guest blog post from Jennifer L. Schenker.

This blog post was adapted from www.informilo.com. Click here to read the original posting, provided courtesy of Informilo.

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Nokia and Ericsson: A Tale of Two Telcos

Like a one-two punch, the two Nordic giants of telecom equipment reported results on Apr. 22 and 23 that fell short of analyst estimates. Nokia’s first quarter revenues announced on Apr. 22 grew 3% from the same period a year earlier, to €9.5 billion ($12.7 billion), and net income nearly tripled from 2009’s tough first quarter, to €349 million ($466 million). But the earnings were about €61 million shy of analyst estimates, and Nokia’s shares plunged 13.3% on Apr. 22 and another 2% on Apr. 23. It wasn’t so much the profit miss that spooked investors but falling average selling prices for phones, flat market share, and a slightly lowered forecast for operating margins this year.

Ericsson’s results announced Apr. 23 were in many ways worse. Revenue dropped 9% from the same quarter in 2009, to 45.1 billion Swedish kroner ($6.28 billion), about 3 billion kroner ($418 million) short of analyst predictions. Net income fell 27%, to 1.26 billion kroner ($174 million), nearly 38% ($103 million) below analyst estimates. The company blamed tepid operator investment in network equipment and continued sharp price competition from rivals. Yet Ericsson shares soared 10.3% on Apr. 23, largely because its results included a near-doubling in North American sales.

Is there an illness at the heart of Nordic telecom? No question, the first quarter was a comedown from the results posted by both Nokia and Ericsson in the final quarter of 2009. But aside from that, the companies are facing quite different situations. While the reaction from investors in both cases may have been overdone, the basic direction of movement reflects diverging realities.

Nokia, whose shares have fallen 1.4% this year against a backdrop of generally rising telecom stocks, can’t seem to catch a break these days. Long the leader in mobile handsets, and still hanging on to one-third of the overall market, Nokia has been sent reeling by the success of the Apple iPhone. Sure, Nokia sold 21.5 million “converged mobile devices,” or smartphones and mobile computers, in the first quarter, up 57% from a year earlier. Apple, by comparison, sold just 8.75 million iPhones. But Apple snagged an average of $622 in product and service revenue for each iPhone, whereas Nokia’s devices sold for an average price of $207 (€155). Translation: Apple made 22% more revenue on 60% fewer units—and its profit margins were even more dominant.

It's not as if the Finnish giant hasn't been developing smartphones for years, or hadn't spotted the trend towards mobile services. Indeed, it was ahead of the rest of the industry for many years in both areas. Recall that the original palm-top Communicator with a QWERTY keyboard came out in 1996(!), and Nokia made waves—and annoyed jealous mobile operators—a decade ago with its Club Nokia download center for ringtones, screen savers, and other phone enhancements. But Apple, with its snazzy design, great timing, and unparalleled ability to rally software developers, has walked away with the market buzz in state-of-the-art smartphones and downloadable (and revenue-producing) apps.

It's this perceptual gap that inclines investors to sell Nokia on any signs of weakness in its results. Overall, the company's performance remains enviable. It sold a solid 107.8 phones in the first quarter, up 16% from a year earlier (against a market that Nokia predicts grew 11%) and it still enjoys 12.1% operating margins in its handsets and services business. Its operating cash flow in the quarter was a cool €1 billion, and its somewhat troubled Nokia Siemens Networks joint venture gratified analysts with a small pro-forma profit for the quarter. Even the forecast decline in 2010 operating margins—from an earlier estimate of 12% to 14%, to a revised range of 11% to 13%—doesn't amount to much.

A bigger worry is that Nokia still hasn't come up with a blockbuster answer to the iPhone, and the time horizon is slipping. CEO Olli-Pekka Kallasvuo told analysts Apr. 22 that Nokia's first device using a new open-source version of the Symbian smartphone operating system, known as Symbian^3, won't ship until the third quarter of this year. It had earlier been expected in the second quarter. A follow-on Symbian refresh is now expected in 2011.

What about Ericsson? Far and away the dominant seller of mobile network equipment and services, the Swedish company has been on a roll since it bounced back from the horrorshow of the dot-com and telecom crash in the early part of this decade. But stiff competition in its business, especially from rising Chinese rival Huawei, is keeping prices down at the same time that recession-strapped mobile operators are holding back on spending.

Ericsson has bulked up by buying other companies, including some of the assets of failed Canadian telco gear-maker Nortel. It was the addition of those assets, plus a well-timed deal with AT&T, that helped Ericsson lift its North American sales 99% in the first quarter, to $1.3 billion, making the region now its largest in the world.

The proximate reason investors bid up the shares of Ericsson even as they hammered Nokia is, ironically, the same: the iPhone. In his conference call with analysts after the earnings announcement, Ericsson CEO Hans Vestberg pointed to the rapid growth in mobile data services in the U.S.—a phenomenon largely driven by Apple's popular device and the voracious wireless bandwidth consumption of its users. Investors see huge opportunity for Ericsson to sell equipment that serves that growing demand, which in some cities has already lead to network saturation. Credit Suisse figures Ericsson could be 20% undervalued at its current price.

As for Nokia, its shares are likely to remain under pressure until it shows a clear turnaround. With further delays on tap in next-generation software, says analyst Mark McKechenie of Broadpoint AmTech, 2010 is likely to be a "more of the same" year. The truth is, being the volume leader with dominant market share outside the U.S. just isn't enough when you're facing a phenomenon like Apple.

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Irish Startups Shine in Venture Tech Tour

Venture capitalists are descending on the U.K. and Ireland this week to meet the cream of technology upstarts. They’ll be introduced to companies such as Belfast’s Lagan Technologies, a supplier of software for improving delivery of public services that has become a world leader in its market niche, beating rivals like Oracle for contracts with American cities from San Francisco to Boston.

Lagan is one of 30 companies pitching themselves to a group of more than 60 venture capitalists during the U.K. & Ireland Tech Tour on April 27-28. Many of the presenters are, like Lagan, later-stage companies that have already carved out successful global businesses. A surprising one-third of them are located on the Emerald Isle.

This week’s tour of the U.K. and Ireland is the 42nd such outing put on by the Geneva-based European Tech Tour Association, an independent non-profit organization that has been discovering and promoting early- and later-stage tech startups for more than a decade. It last held tours of England in 2004 and 2007, Scotland in 2001 and 2006, and the Republic of Ireland in 1999 and 2004.

What sets this tour apart from earlier trips is how many of the companies have already established themselves as world leaders in their fields, says Victor Basta, a veteran investment banker and president of the European Tech Tour Association. Basta is a former partner with London-based boutique investment firm Arma Partners, and now serves as an advisor to Magister Artis Capital, a London-based firm that provides merchant banking services for later stage companies and investors in growth industries.

The other major difference this time around is the number of Irish companies. Lagan is based in Northern Ireland, and another 10 of the startups that made the tour selection committee’s final cut are from the Republic of Ireland. That’s a disproportionately large number, considering that Ireland has a population of just 4.5 million, compared with 62 million in the U.K, says Basta. “What this shows is that multiple years of government focus on technology in Ireland, tie-ins with universities, an entrepreneurial spirit, and a local ecosystem of advisers and investors has created an ecosystem to rival [that of] Cambridge,” says Basta.

While many areas in Europe have tried and failed to recreate the success of California's Silicon Valley, Cambridge—sometimes dubbed "Silicon Fen"—is often cited as the place that has come closest. The English city is home to a large cluster of high tech businesses, many of which are connected to the University of Cambridge. Ireland's focus, says Basta, "seems more on building companies than technological innovation, and that cultural difference seems to be paying off." The Irish government also has done proportionally more to support entrepreneurs than Britain has, he says. "It's clear from the quantity and quality of the Irish candidates on this tech tour that their efforts are paying off handsomely."

Des Doyle, manager of growth capital for the government-run agency Enterprise Ireland, is proud of the high number of Irish companies on the tech tour. Enterprise Ireland notified local companies about the competition and urged them to apply, Doyle says. The Irish government has made a "huge commitment to supporting the entrepreneur," he says.

Among other programs, Ireland offers richer tax incentives than do many of its European neighbors for entrepreneurs who start their own companies and for investors who bet on ventures aiming at global markets. Through Enterprise Ireland, the government also directly finances start-ups—some 70 to 75 companies per year, at an average investment of €300,000 ($400,000) each—and makes indirect investments by putting money into seed and venture capital funds and defraying the operational costs of regionally-based angel networks.

For example, the eighth new fund supported through Enterprise Ireland's Seed and Venture Capital Program is comprised of a €17 million investment from the Bank of Ireland, €8 million from Enterprise Ireland, and €1 million from the University of Limerick Foundation. Managed on behalf of the Bank of Ireland and venture capital firm Kernel Capital, the €26 million fund launched last November invests in startup and early stage companies in the technology, food, and financial services sectors.

When you add up all of the efforts "you don't find that kind of government sponsorship in Cambridge or elsewhere in Europe," says tech tour president Basta. "It's worth looking at this in more detail because Ireland is producing a disproportionate amount of world-class start-ups."

Guest blog post from Jennifer L. Schenker.

This blog post was adapted from www.informilo.com. Click here to read the original posting, provided courtesy of Informilo.

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Apple and Nokia Gain in Smartphone Sales

The numbers are out from market research houses, and the biggest winners for the first quarter of 2010 in smartphones were Apple and Nokia. Both companies saw their sales surge from the same period in 2009, and both gained market share, according to figures released Apr. 30 by Boston-based researcher Strategy Analytics.

The telecom research firm figures the global market for smartphones—handsets that support wireless e-mail, Internet access, downloadable apps, and often touchscreen- or stylus-based user interfaces—grew by a sprightly 50% vs. the first quarter of 2009, to 53.7 million units. That amounts to about 18% of overall handset unit sales, up from just under 15% a year earlier. Apple’s sales grew a dazzling 132%, to 8.8 million units, while Nokia’s grew an impressive 57%, to 21.5 million units.

Canada’s Research In Motion was no slouch, either: The BlackBerry-maker shipped 10.6 million units in the quarter, up 45% from a year earlier, giving it the No. 2 position overall in the category, according to Strategy Analytics. But RIM’s market share in smartphones slipped slightly to 19.7%. Finland’s Nokia commanded 40% of the market—up from 38.2% in the first quarter of 2009—and California-based Apple walked away with 16.4% share, vs. 10.6% a year earlier.

Of course, smartphones are still a relatively small (if profitable) part of the overall mobile phone market, where Nokia and the Korean giants Samsung and LG Electronics continue to dominate. Figures released Apr. 30 by researcher IDC show that the global market for all kinds of handsets, which run the gamut from high-priced devices with video and GPS navigation to lowly voice-and-texting models, surged a healthy 21.7% in the quarter, to 242.2 million units, vs. the same period in 2009.

IDC cautions that this isn’t a sustainable growth rate, given that last year’s first quarter—amid the depths of the global economic downturn—was one of the worst on record. Overall, IDC expects mobile phone shipments this year to climb by about 11% vs. 2009. But in an encouraging sign for mobile operators who have invested billions in building out third-generation (3G) networks that support faster wireless data connections, ABI Research said on Apr. 30 that for the first time in history sales of 3G-compatible phones in the first quarter of 2010 eclipsed those of earlier-generation (2G) devices.

Nokia didn't fare as well in the broader market as it did in smartphones: It shipped 107.8 million units in the quarter, up 15.7%, but it lost some market share, clocking in at 36.6% overall, compared with 38.4% a year earlier. Most of the difference owes to continued success by Samsung, which now has nearly 22% of the market (up from 18.9% a year earlier), and to gains by RIM. Samsung has boosted its distribution in developing markets and has lifted its average selling price with higher-end devices, while RIM has managed to expand its market beyond its core corporate clientele to a growing number of consumers— especially "text-crazy teens," as IDC puts it.

LG Electronics and the Japanese-Swedish Sony Ericsson joint venture both lost share, though LG held on to a clear No. 3 position. No. 5-ranked Sony Ericsson's unit sales fell a worrisome 27.6%, but it returned to profitability in the quarter after a stretch of losses and introduced a number of snazzy models, including the Xperia X10 and Vivaz, that could help it claw back market share and maintain or raise its high average selling price going forward.

Motorola, which turned in numbers that signaled something of a turnaround, nevertheless fell out of the top five for the first time in history. IDC figures that the "other" category, which includes Motorola, Apple, and dozens of smaller makers, grew slightly from 24.3% of the market a year ago to 25.3% in the first quarter. Motorola's results were boosted by an improved showing in smartphones—especially devices based on the Android operating system from Google. While noting that Motorola's overall cell phone sales fell by 43% year-over-year, researcher Rethink Wireless notes that Motorola's results "offered the most concrete indication yet that the firm's handset turnaround is underway."

Among the factors that could help Motorola are its growing success in the market for handsets based on Android. Equity analyst Mark McKechnie of Broadpoint AmTech says that Google appears to be "backing away from its own branded phone," the Nexus One. At the same time, Hewlett-Packard's acquisition of Palm signals that the computer giant could lessen its support for both Android and Microsoft's Windows Mobile in favor of the well-regarded WebOS operating system developed by Palm. The result, McKechnie says, could be that Motorola will emerge as "the leading Android vendor." If Android takes off, that could give Motorola an edge in the market, though analysts say it still needs to develop its global distribution.

Winning the battle for mobile phone market share and profits looks increasingly to rely on success in smartphones. Lower-end devices will still command the lion's share of the business, and in that regard Nokia, Samsung, and LG are still well positioned. But as Apple and RIM continue to gain, and as Motorola finds new footing in Android devices, the fight is far from finished. The next few quarters could chart a new path for the mobile phone industry and for the consumers around the world who continue to snap up handsets at a remarkable rate.

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Borderless European Cloud Risks Fragmentation

Nationalism is rearing its head in cyberspace. A proposal is gaining ground in France to build a federation of interconnected local computing clouds—funded in part by the government—to protect the country’s sovereignty, data privacy, and jobs. Some observers fear the idea could spread to other countries on the Continent, potentially undermining the promised benefits to Europeans of universal cloud computing, which is being billed as the biggest shift in information technology since personal computers were introduced in the 1970s.

The idea for a cloud à la Française is in part a backlash against American providers of cloud computing services such as Google, Amazon, IBM, and Microsoft. As with Europe’s $6 billion Galileo sat-nav system—an alternative to the U.S.-operated GPS—and various Old World search engine projects such as France’s Quaero, some Europeans worry about becoming overly dependent on American technology in key strategic areas.

On May 17, a group of French technology companies and businesses known as the Association for a Digital Economy in France (l’ADEN), called on local governments in France to partner with private companies to build a network of data centers and shared cloud platforms and services that would cater to the computing needs of French businesses, organizations, governments, and citizens. Such a network would provide an alternative to handing over data and processes to American providers. The group has suggested that the local cloud infrastructure could be built with the help of funds set aside for France’s “grand emprunt national,” a €4.5 billion economic stimulus package that will kick in at the end of next year.

Cloud computing is the term for a new form of distributed computing that allows consumers, enterprises, and governments to store their data and applications on remote networked servers, rather than on local computers and data centers, and to tap into computer applications and other software via the network—freeing themselves from building and managing their own technology infrastructure. In addition to reducing operational costs, analysts say the shift to cloud technologies allows radical business innovation and new business models.

Some industry experts in Europe believe only giants like Google and Amazon can achieve the necessary economies of scale in building the massive data centers that underpin the cloud. They fear that national projects will be white elephants and question whether big enterprise customers like Danone and Carrefour will be willing to pay the price of French sovereignty.

"Interconnection of hybrid clouds is not a simple problem, and the risk is that the benefits come slowly and that local champions cannot grow and reach critical mass fast enough," say Pierre Liautaud, a Frenchman who has worked in the tech industry for 25 years, holding executive positions at both IBM and Microsoft, as well as running several startups. Liautaud is currently organizing a November conference for the European Tech Tour Association to highlight European startups in cloud computing, most of which are concentrating on applications that run on top of infrastructure run by companies such as Google, Amazon, and Microsoft.

Yet some business people argue that European corporations won't remain globally competitive if they're not in charge of their underlying cloud computing infrastructure and software. They say Europe can't afford to let American companies control a technology that could underpin every consumer, business, and government service of the future. "Europe cannot stay away from owning its own cloud infrastructure," says François Bourdoncle, CEO of Exalead, a Paris-based provider of infrastructure software for the cloud. "It is a critical element of competitiveness—not even considering the sovereignty part of it—to control where your data is hosted, how it is being used, and how you access it."

Bourdoncle and others say the industry is at an inflection point. Some liken it to the moment when Europe realized that computer chips would be key to the future and that it needed to have its own global champion. The French and Italian governments set about fusing two national semiconductor companies to create STMicroelectronics, which today ranks among the top 10 chipmakers globally. Now, it's time to do the same in cloud computing, they argue. At stake is a market that tech consultancy IDC projects will grow from $17.4 billion in 2009 to $44 billion in 2013.

For cloud computing to reach that kind of market size, the industry must address important issues that are alarming consumers, businesses, and governments. According to a report prepared by the World Economic Forum and consultancy Accenture, the challenges include keeping data and systems secure, maintaining the privacy of people and organizations, preventing customers from being locked into one cloud provider, and creating the right regulatory balance between customer protection and business efficiency.

Some Europeans question to what extent American companies like Google can be trusted to guard data privacy. Earlier this month European privacy regulators reacted angrily to the disclosure by Google that it inadvertently collected private data from Wi-Fi networks while compiling its StreetView service in several European countries.

Distributing data storage is supposed to make it safer, but some European companies, particularly in Germany, are reluctant to let American companies transport their data across borders and out of the country. National data protections laws further confuse the market, raising questions over whether Europe will have a single market for cloud computing. And the May 17 position paper from l'ADEN arguing in favor of a French cloud makes market fragmentation a real possibility.

The French government has already said it will set aside €2.5 billion of its €4.5 billion stimulus plan for digital services, including cloud computing. The French business newspaper Les Echos reported earlier this year that Dassault Systemes, France Telecom's Orange Business Services, and Thales were lobbying the government to set aside €700 million for cloud computing.

The budget isn't yet set in stone but pressure is clearly mounting for the government to step in. Politicians in France have been vocal about issues of national security, the implication being that cloud computing – if controlled by the likes of Google and Amazon – would hurt data privacy and leave companies vulnerable to industrial espionage.

In its May 17 statement L'ADEN, whose members include Orange Business Services and Bouyges Telecom, gives a list of reasons for the government to back a plan to build a federation of local clouds including:

• Safeguarding national sovereignty: "Notably against big American and Asian players in cloud computing and in order to conserve knowledge and technological competence on French territory as well as protecting data privacy and sensitive industrial information."

• Creating jobs: "Developing locally based IT infrastructure will avoid workers having to relocate outside France and [will] facilitate the development of teleworking."

• Developing secure digital services in areas such as health, education, the legal system and government services.

• Ensuring the development of businesses of all sizes by making the best IT infrastructure available locally to companies throughout all regions in France

• Avoiding the under-utilization of existing French data centers and rendering them obsolete.

Ivan Ferneti, a principal at London-based private equity firm Doughty Hanson Technology Ventures, which has invested in European-based cloud startups, expressed skepticism about the ADEN proposal. Managing a sophisticated set of services from a state-of-the-art data center requires deep knowledge and experience in many IT fields, he says.

"This is why running cloud data centers works only for the likes of Amazon, Microsoft, Google and a very few others who will get bigger and bigger," he says. "If local government and politicians believe they can create local employment with cloud infrastructure investments they are misled."

European serial entrepreneur Roman Stanek, currently founder and CEO of Good Data, a cloud computing company that provides collaborative analytics on demand, also questions the ability of individual European countries to compete on infrastructure. "There is enough demand for infrastructure-as-a-service, for example, from Amazon.com, but I don't believe that the local European infrastructure will see enough demand, and therefore, scale, to compete," says Stanek, a Czech who previously founded NetBeans, which was sold to Sun Microsystems and Systinet, which was sold to Hewlett-Packard.

Bourdoncle of Exalead sees it differently. His company is part of the Quaero projet, which is often painted as a misguided French government attempt to build a "Google killer." Bourdoncle bristles at that description. He describes Quaero (Latin for "I Seek") as a €100 million large-scale collaborative research program around multimedia indexing. (More details about the project's progress will be revealed to journalists on May 27 at a Paris press event.)

In addition to furthering multimedia search, Exalead owns technologies that can target important areas of cloud computing, such as distributed storage to replace today's relational databases, which Bourdoncle says don't scale up to the cloud. European companies can and should build infrastructure software, he argues, because that's where the margins are, and doing so will deliver more choices to customers. "Fragmentation of the market is a good thing because it brings competition," says Bourdoncle. "What's important is that [American companies like Google and Amazon] collaborate to make their infrastructure interoperable with that of others."

Only a few global players are likely to succeed at offering cloud computing infrastructure and services in horizontal segments like customer relationship management. Right now, the leaders are American, says David Bradshaw, research manager for European cloud services at IDC. But a large number of players may succeed in niche markets or by creating new kinds of applications for consumers and business, Bradshaw says. Indeed, IDC forecasts roughly half of all of the projected revenue from cloud computing will come from applications. Providing mobile cloud services is also seen as a big area of opportunity for European companies such as BT, Telefonica, and Orange.

"We could do with a bit more competition in some areas but services created by local vendors need to make commercial sense," says Bradshaw, "Otherwise, Europe could end up with enormously costly white elephants."

Guest blog post from Jennifer L. Schenker.

This blog post was adapted from www.informilo.com. Click here to read the original posting, provided courtesy of Informilo.

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Did Vuitton Engage in a Little Fakery, Too?

LVMH Moet Hennessy Louis Vuitton has zero tolerance for companies that manufacture and sell fake goods. The Paris-based luxury group works with law-enforcement authorities to shut down counterfeiting operations in China, and has won court rulings against eBay for selling fake copies of Vuitton bags, Dior sunglasses, and other items.

But now British regulators have accused LVMH of engaging in a bit of fakery itself. On May 26, the country’s Advertising Standards Authority banned two recent Louis Vuitton advertisements, saying they left a “misleading” impression that the company’s products were handmade.

The ads, the subject of a Europe Insight blog post last December, depict Vuitton handbags and other items being fashioned by workers using hand tools and needle and thread. In fact, most Vuitton products are largely machine-produced—something I have witnessed firsthand in a Vuitton factory. The British truth-in-advertising agency opened an investigation after three consumers complained about the ads.

In its ruling, the agency said that Vuitton didn’t deny using sewing machines in its workshops. “They said that hand sewing machines were used for some aspects of items because they were more secure and necessary for strength, accuracy and durability,” the agency said. However, the company provided no documentation to the agency about the proportion of work done by hand. “Because we had not seen evidence that demonstrated the extent to which Louis Vuitton products were made by hand, we concluded that the ads were misleading,” the agency said.

LVMH, in a statement, said the ruling was not “about the truth of the claim, but whether there was sufficient documentation available to prove to the ASA the ‘extent to which LV products are made by hand.’ ” LVMH says the ad campaign has now ended.

Don’t expect Vuitton customers to rise up in anger over this issue. Reader comments on the earlier Europe Insight blog post were divided between those who thought the ads were dishonest, and those who thought the company was, as one reader put it, simply “celebrating craftsmanship and skill. What’s wrong with that?”

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Entrepreneurship Goes Global

Among the global economic upheavals of the past two decades, here’s one worth cheering about: the worldwide spread of entrepreneuriship. Anyone who doubts that should have headed to Monaco last weekend for the World Entrepreneur of the Year awards ceremony.

The 42 countries represented at the event included China and several former Soviet-bloc nations - places where starting a private business was illegal not so long ago. In other countries, the weakening of traditional business structures, such as Korean chaebol, have created opportunities for smaller players. Tax and regulatory reform, the lowering of protectionist barriers, technological advances and the rise of the Internet, all have made it easier — though certainly not easy - to create and build a business.

Ernst & Young started the competition in the U.S. in 1986 and expanded it worldwide 10 years ago. More than two-thirds of this year’s 5,000 contestants were from outside the U.S. The finalists included the heads of emerging-market powerhouses such as Indian industrial conglomerate Mahindra Group, and Geely Automobile Holdings, a Chinese automaker that recently bought Volvo, and dozens of lesser-known success stories.

This year’s winner was Michael Spencer, the founder and chief executive of London-based ICAP. Spencer started the company in 1986 with $45,000. It’s now a $2.7 billion-a-year business that is the world’s No. 1 inter-dealer brokerage, serving as an intermediary for trading between financial institutions. In starting a company, “I knew there was a serious chance of failure,” Spencer says. “But we fought our way out of setbacks.”

Indeed, many of these entrepreneurs have shown a remarkable ability to use adversity as a springboard for growth. Take Indrek Sepp of Estonia, who started AS Pristis, the biggest security company in the Baltics. Sepp started installing car alarms to make extra money while a student in the early 1990s. When revenues flagged after automakers began installing alarms in new cars, he started installing alarm systems. That worked fine - until the housing market in the Baltics collapsed when recession hit two years ago. Undeterred, Sepp moved into the security-guard business last year, buying one of the region’s biggest security-services companies. Says Sepp: “It’s because of the crisis that we were able to purchase this company,” which was being unloaded by its corporate parent at a bargain price.

Another finalist in the competition, Korean entrepreneur Hyeon Joo Park, spotted opportunity in the Asian financial crisis of the 1990s. He started Korea’s first mutual fund in 1998 when that country’s equity market “was the most undervalued in the world,” he recalls. As share prices began rising, investors flocked to his Mirae Asset Global Investments group, which specializes in emerging-market equities. Today it has $45 billion in assets under management and operates in eight countries, including the U.S.

Ernst & Young CEO Jim Turley says his firm last year surveyed entrepreneur-led companies, comparing their responses to the global recession with the responses of longer-established multinationals. “Two-thirds of the entrepreneurs reported they were seeking new opportunities,” he says, while only 20% of the older companies were doing so. “The entrepreneurs are the only ones adding jobs.”

That finding wouldn’t startle anyone in the U.S., where entrepreneurship has long been seen as a key engine of economic growth. But elsewhere in the world, the emergence of a new generation of resourceful and resilient business people is very big news indeed.

Given entrepreneurship’s increasingly global dimension, it’s probably fitting that the U.S. finalist in this year’s competition was Tom Adams, CEO of Rosetta Stone, a company that makes software to help people learn foreign languages.

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French Artificial Heart Maker Plans June IPO

In a sign that European tech IPOs are warming up, French startup Carmat, a pioneering designer of an entirely artificial human heart, is planning a €15 million initial public offering on the Alternext market of NYSE-Euronext Paris this month. Co-founded by French heart surgeon Alain Carpentier, the company has tapped the latest technological advances in software, materials science, and aerospace (including stress-testing, miniaturization, and design for severe environments) to devise an artificial heart that avoids problems plaguing earlier such devices.

Carmat has already raised €42.70 million from private backers, including €2.25 million from the Professor Alain Carpentier Foundation and European Aeronautic Defence & Space Co. (EADS), the parent company of passenger jet maker Airbus; €33 million from OSEO, the French state innovation agency; €5 million from Paris-based venture capital firm Truffle Capital; and €950,000 from a share capital increase.

The money raised in the IPO will be used to commercialize a prototype device that has been under development for 15 years. This year Carmat plans to produce 25 prostheses for preclinical trials and implantation in humans. The goal is to conduct full clinical trials with humans in 2011, after obtaining the permission of the AFSSAPS, the French government agency for healthcare product safety. Commercial launch in Europe and the U.S. is expected in mid-2013, says Carmat chief executive Marcello Conviti.

The Carmat artificial heart is intended for patients who have suffered a massive heart attack or those with late-stage heart failure. Cardiac failure is the leading cause of death worldwide and is responsible for around 100,000 deaths per year in Europe and North America alone. Yet fewer than 4,000 people per year are lucky enough to get human heart transplants. “More than 95% of those people currently have no alternative, so this is our potential market,” says Conviti, who has more than 25 years experience in cardiovascular medical devices, most recently as senior vice president strategy and new business development at Edwards Lifesciences (EW).

Work on the Carmat artificial heart began under Carpentier in the labs of Matra, a French engineering company that was absorbed into EADS in 2000. The project was kept secret until October 2008, when EADS spun it off.

Protected by 10 global patents, the Carmat heart offers numerous advantages over earlier devices such as the famous Jarvik artificial heart first implanted in humans in the early 1980s. To start with, it uses two internal pumps to move blood to the lungs and into the body, rather than the single pump typical of earlier mechanical or pneumatic designs.

Secondly, thanks to advances in biopolymer science, the Carmat heart is far more compatible with human blood than predecessors. This greatly reduces the risk of blood clot formation—a persistent problem with early artificial hearts—and could also spare patients from dependence on anticoagulant drugs.

Thirdly, the Carmat heart is fitted out with feedback sensors and cutting-edge software that allow it to adjust its speed and pressure depending on the patient's exertion level. This permits patients to engage in variable levels of activity and live more normal lives. What's more, the heart can be powered for up to five hours off a portable battery pack—compared with as little as a half-hour for earlier artificial hearts—allowing for a much greater degree of freedom and mobility.

Last but not least, the Carmat heart is designed for much greater durability than earlier devices, with a projected lifetime of about five years or 230 million heart beats. To boost reliability, it includes diagnostic software that allows doctors to monitor the device remotely and be alerted in the event of problem. They can even download software upgrades into the heart from a distance.

The first clinical trial in 2011 will involve implanting the hearts into patients and monitoring them for 180 days to measure short-term safety and efficacy. The second trial will include 22 patients, including six from the first trial, to test for long-term use. The cost of the operation is expected to be roughly equivalent to that of a human heart transplant, but follow-up care, which adds up to around €50,000 per year for patients with transplanted human hearts, will be significantly reduced as the artificial hearts are expected to require fewer doctor visits, re-hospitalizations, and drugs.

The human heart is likely to be the first organ to be successful replaced with "bio body parts," says Philippe Pouletty, a trained medical doctor and a general partner at Carmat investor Truffle Capital. Pouletty predicts that artificial kidneys and livers may be next. The introduction of completely artificial organs, adds Piet Jansen, Carmat's chief medical officer, also will require the evolution of new healthcare professions: in addition to cardiologists, he says, there will be "cardio engineers" who treat heart failure.

Commercialization of an artificial human heart is the realization of a lifelong dream for Carpentier, who invented of the first biomedically-engineered heart valves in the 1980s. The replacement valve market is now worth $800 million annually, and one out of every two procedures worldwide uses a Carpentier valve or ring, according to Carmat CEO Conviti.

Three decades ago when Carpentier sought to finance and produce his breakthrough invention he had to get U.S. financial backing, creating a partnership with Edwards Lifesciences. The phenomenal success of the heart valves prompted Professor Carpentier to go back to the drawing board and try to design an entire heart that could be implanted in humans, this time with European backing. Looks like his dream is on the verge of coming true.

Guest blog post from Jennifer L. Schenker.

This blog post was adapted from www.informilo.com. Click here to read the original posting, provided courtesy of Informilo.

View the original article here

How EA Integrates European Game Startups

Global videogame giant Electronic Arts has made lots of acquisitions—especially in the mobile arena—but how does it make the deals work? “M&A is a challenging, risky activity,” admits Barry Cottle, senior vice-president and general manager of EA Interactive, the division of Electronic Arts that includes Playfish, a London-based social gaming company acquired last year, as well as EA Mobile and Pogo. EA doesn’t pretend to have all of the answers, but its executives agreed to talk to Informilo about how the gaming company integrates startups once it acquires them—an issue of interest to multinationals in all sectors.

“The gaming space moves fast, market segments and different types of genres pop up, so we not only have to use internal efforts to try and innovate but also look at outside companies that are attacking those places, and, when it makes sense, to acquire them and bring them into the organization,” says Cottle. “What is key is you have to get an agreement on the objectives and the measurements, but not dictate the culture on how to get there.”

Plans for Playfish, the fourth European games studio acquired by EA since 2004, include allowing it to stay in London and to retain its culture. The hope is that Playfish will help EA create more hits in social gaming, an area that is expected to help significantly expand the gaming market by attracting a broader audience.

Giving acquired game studios a degree of autonomy is a formula that has worked well for EA, helping it launch new blockbuster games, retain the management of start-ups it acquires, and infuse its top management with young talent.

Take the case of Digital Illusions Creative Entertainment (DICE), a Swedish game studio specializing in first-person shooter games, which was purchased by EA in 2006. Swedish computer scientist Patrick Soderlund, DICE’s chief executive officer at the time of the acquisition, not only stayed on—along with most of the team—but has risen in the ranks at EA.

Soderlund, 36, now holds the title of senior vice president and group general manger at EA. He oversees European studios for the EA Games Label, including DICE, Britain's Criterion Games and Germany's Phenomic. In that role he has helped drive game franchises such as Need for Speed and BurnOut, first person shooter genres Battlefield and Medal of Honor, and the development of free-to-play games for EA's Games label by teams in Stockholm, Frankfurt, and Redwood Shores, Calif.

Soderlund says he never imagined working for a big company. DICE, which was founded in 1992 by seven Swedish entrepreneurs in Gothenburg, started out as a maker of games for personal computers. Soderlund came into the picture when a company he created, called Refraction Games, was acquired by DICE in 2000. A few weeks later, DICE's CEO left the company. Soderlund was asked to run the newly merged Swedish gaming studio, which began to grow rapidly, working with the likes of EA and Microsoft and growing from 40 to 250 employees in two years.

In 2000 EA and DICE partnered on a first-person shooter game called Battlefield 1942. The game became a big hit on PCs, and in 2003 EA bought an 18% stake in DICE. The two companies went on to create several games together, including Battlefield 2, all of which were commercial successes. In 2005 EA acquired more shares in DICE, and then purchased the rest of the company in 2006.

Soderlund and the DICE team had some qualms about the deal. "One of the fears we had when we joined EA is that we were joining a big beast of a company and we would just be told what to do," says Soderlund. But the reality turned out to be far different, he says. "I feel like we have a complete mandate to run and drive our businesses. I couldn't work inside a company that did not have that kind of trust and freedom."

DICE, which by that time had moved to Stockholm, did more than retain its creative freedom. Its relationship with EA helped the Swedish studio expand onto multiple platforms and significantly increase the Battlefield brand's visibility. Under EA, DICE released an online multiplayer World War II first-person shooter video game called Battlefield 1943, which became the fastest-selling game ever to reach one million units on Xbox Live Arcade.

DICE has other successes, too. Battlefield Bad Company 2, a game released last month for the Xbox 360, PlayStation 3, and PC, was the best-selling March release on record in North America and Europe. Users of the game, which puts the player in a fictional war between the U.S. and the Russian Federation, have racked up more than 81 billion points in online multiplayer sessions. The game also has more than 44,000 Twitter fans, the most of any EA title, according to the company.

The link-up with EA also allowed DICE to move into an entirely new area, a first person action-adventure video genre known as parkour games. DICE's first parkour game, called Mirror's Edge, for PlayStation 3, Xbox 360, and the PC, is set in a society where communication is heavily monitored by a totalitarian regime and a network of runners transmit messages while evading government surveillance. The game differs from most other first-person perspective video games in allowing for a wider range of actions, such as sliding under barriers and shimmying across ledges.

"DICE wanted to create another intellectual property beyond the Battlefield brand, which is expensive and a huge risk," says Soderlund. "I am not sure we could have pulled this off without EA."

Working for a big company has required DICE to make some adjustments, such as adhering to corporate policies on financial reporting and travel. But the key to its successful integration and that of other studios, such as Criterion Games, is that EA "allows studios to keep their brands, keep their teams, and lets the leadership use the creative process that works for them," Soderlund says.

It's not surprising, then, that EA plans to treat Playfish the same way. The videogame giant said last November that it would acquire Playfish for about $275 million in cash and $25 million in EA stock. EA Interactive general manager Cottle says the company decided to buy Playfish because duplicating its success in social gaming would have been difficult.

Playfish produces games for friends to play together over social and mobile platforms such as Facebook, MySpace, Bebo, Google Android, and the Apple iPhone. It now counts more than 60 million monthly active players across its 11 titles, driving more than one billion game play sessions every month.

The company's games have been huge hits on Facebook, including Pet Society, which boasts 19 million players per month and Restaurant City, which has 14 million monthly players. That's significantly more than the benchmark multiplayer online game, Vivendi's World of Warcraft, which has 12 million players.

"The acquisition enables us to be a leader right away," says Cottle. That's important because games are shifting rapidly from products to digital services. The acquisition is expected to help EA make the transition.

The deal also will give Playfish access to additional resources expand its portfolio. "The reason we thought it was such an exciting deal to combine with EA is the fact that we feel we have only scratched the surface of where the games industry is going," says Kristian Segerstrale, Playfish's founder.

Social gaming could permit publishers to reach customers who haven't typically played on consoles, including women and people over 50. "Imagine how big the industry can be once we are able to get those people who play games because they want to have fun with friends, not for the immersive journey on the console," says Segerstrale. "That's what excites me, and that's why I'm in it for the long term." He and the majority of the Playfish team are now working for EA and are committed to staying. "We expect to get a lot of tailwind from EA," he says.

Guest blog post from Jennifer L. Schenker.

This blog post was adapted from www.informilo.com. Click here to read the original posting, provided courtesy of Informilo.

View the original article here

A New Approach to Classroom Computers

Israeli startup Time To Know is out to revolutionize education by offering schools a new digital teaching platform and interactive curriculum. The company’s ambitious goal: to radically change the way teachers and students interact.

Founded in 2004 and located in a cheerfully painted former girls college in Jaffa, Time To Know has raised $60 million in funding spearheaded by Shmuel Meitar, a co-founder of customer care and billing software giant Amdocs (DOX). The company has won contracts with schools in Israel, the state of Texas, and New York City, and counts 350 employees around the world.

The flaws in today’s “chalk and talk” educational system, which has remained pretty much unchanged for the last century, are widely recognized. But attempts to fix it by bolting on computers and connectivity have so far had only limited success—partly due to a lack of relevant educational content and software tools, says Dovi Weiss, Time To Know’s Chief Pedagogical Officer and a co-founder of the company. “What is needed is a holistic approach,” he says.

Enter Time To Know’s Web-based software, which forms the basis for a suite of tools ranging from course planning and classroom management to group collaboration and student assessment. At the core is a collection of interactive curriculum in math and language arts (reading, writing and comprehension), as well as English as a second or foreign language. Thanks to its real-time nature, Time To Know gives teachers immediate feedback on which students in the classroom are succeeding or falling behind. “What we are building is a partnership between teachers and technology,” says Weiss.

Time To Know's digital platform was developed by a team of some 340 educators, software developers, and graphic and creative designers. It is "one of the major pillars" of a five-year, nationwide plan in Israel to increase the use of computers in schools, says Weiss. The company hosted Israeli Prime Minister Benjamin Netanyahu at one of the schools using Time To Know technology on June 3 to demonstrate how the software can not only help make learning more fun and interactive but also increase understanding of complex mathematical concepts and improve language listening and comprehension skills.

Weiss and Time To Know co-founders Molly Globus and Paz Litman were invited to travel with Israeli President Shimon Peres to South Korea the week of June 7 as part of a delegation to advance Israeli interests in that country. "Education is a very high national priority in Korea so it is a very logical match," says Weiss.

The Israeli startup's technology is also being tested as part of New York City's Innovation Zone (iZone) program. In June, New York City School Chancellor Joel Klein announced that twenty of the 81 schools in the project will implement Time to Know's digital platform and interactive curriculum in the 2010-2011 school year. All told, 63 fourth and fifth grade classes will use Time To Know's technology. The iZone pilot sites are testing ways that content is taught to allow more customization.

Time To Know's digital platform currently covers grades four to six but Weiss says plans are in the works to expand it to grades three to nine. The company is also working on an English as a Foreign Language edition of the core curriculum in Arabic, and is seeking strategic partners in Spanish-speaking countries and other parts of the world. "The same digital platform can be used in primary schools in all countries," says Weiss. "Using our content tools strategic partners will be able to adapt it to the local education system."

Of course, schools adopting the system need to equip each classroom with a projector and provide every teacher and every student with laptop and wireless Internet connectivity. But since the software is Web-based no time or money is lost installing the software on computers.

Time To Know prides itself on the very user-friendly interface it has developed for teachers. Only two days of orientation training is needed, Weiss says. Teachers can plan their lessons by adapting the core curriculum to fit their teaching styles and local requirements, either by selecting pre-defined lesson sequences containing animations, exploration activities, games and videos, or by mixing and matching to create their own.

Teachers control what's happening in the classroom through a digital dashboard that lets them launch, pause, and switch learning activities on each student's computer or on the whiteboard. Teachers also can shift between class wide, group, and individualized instruction.

As the lesson progresses, students are asked to answer questions on their laptops, and their progress is forwarded to the teacher automatically. The platform then lets teachers assign, in real-time, individualized assignments that match each students' grasp of the subject.

Allowing students to learn at their own pace and according to their own proficiency makes the complex task of teaching students with differing needs easier for teachers, says Weiss. It will also help schools save money because classroom sizes can be bigger without negatively affecting students, he says. Weiss says that adding just one student per class will pay for the price of the software. Pricing depends on the number of students using the system and the amount of content they consume.

Of course, integrating technology into the heart of a school's curriculum will require some tech support. Weiss says he figures that every school with 500 students or more will have to start employing at least one IT specialist. "Any organization using tech in a meaningful way cannot do without an IT person," he says.

The involvement of Amdocs' Shmuel Meitar was crucial to Time To Know. He is not only a financial backer but also the co-founder of Ramat Gan-based Aurec Group, which provided resources and expertise to the startup. Aurec is an international investment group with a 40-year track record of building more than a dozen operating companies from inception to maturity in industries such as media, communication, enterprise software, and advertising. Amdocs is itself a spin-out of Aurec.

The next step is for Time To Know to find strategic partners that will help it expand internationally. "Our strategy is to find very strong local partners who will be able to take our technology and knowhow to create the system and content for the local country," says Weiss. "We are looking for powerful publishers or an IT company with the capability to pedagogically and technically support our system."

There is a strong incentive for schools around the world to move to 21st century teaching methods, says Weiss. Students who use multimedia tools outside the classroom don't learn effectively in classrooms using outdated, dry methods such as "chalk and talk" or "drill and kill." And, teachers have difficulty tracking students' process without the benefit of real-time hard data, meaning many students end up falling behind.

But the real selling point may very well be economic. Time To Know's software will save money because schools can add more students without hiring more teachers. What's more, schools using traditional methods are not churning out students prepared for 21st century careers. If Time To Know can help solve that issue it could positively affect the global economy—making a tough assignment a little easier for governments around the world.

View the original article here

A New Approach to Classroom Computers

Israeli startup Time To Know is out to revolutionize education by offering schools a new digital teaching platform and interactive curriculum. The company’s ambitious goal: to radically change the way teachers and students interact.

Founded in 2004 and located in a cheerfully painted former girls college in Jaffa, Time To Know has raised $60 million in funding spearheaded by Shmuel Meitar, a co-founder of customer care and billing software giant Amdocs (DOX). The company has won contracts with schools in Israel, the state of Texas, and New York City, and counts 350 employees around the world.

The flaws in today’s “chalk and talk” educational system, which has remained pretty much unchanged for the last century, are widely recognized. But attempts to fix it by bolting on computers and connectivity have so far had only limited success—partly due to a lack of relevant educational content and software tools, says Dovi Weiss, Time To Know’s Chief Pedagogical Officer and a co-founder of the company. “What is needed is a holistic approach,” he says.

Enter Time To Know’s Web-based software, which forms the basis for a suite of tools ranging from course planning and classroom management to group collaboration and student assessment. At the core is a collection of interactive curriculum in math and language arts (reading, writing and comprehension), as well as English as a second or foreign language. Thanks to its real-time nature, Time To Know gives teachers immediate feedback on which students in the classroom are succeeding or falling behind. “What we are building is a partnership between teachers and technology,” says Weiss.

Time To Know's digital platform was developed by a team of some 340 educators, software developers, and graphic and creative designers. It is "one of the major pillars" of a five-year, nationwide plan in Israel to increase the use of computers in schools, says Weiss. The company hosted Israeli Prime Minister Benjamin Netanyahu at one of the schools using Time To Know technology on June 3 to demonstrate how the software can not only help make learning more fun and interactive but also increase understanding of complex mathematical concepts and improve language listening and comprehension skills.

Weiss and Time To Know co-founders Molly Globus and Paz Litman were invited to travel with Israeli President Shimon Peres to South Korea the week of June 7 as part of a delegation to advance Israeli interests in that country. "Education is a very high national priority in Korea so it is a very logical match," says Weiss.

The Israeli startup's technology is also being tested as part of New York City's Innovation Zone (iZone) program. In June, New York City School Chancellor Joel Klein announced that twenty of the 81 schools in the project will implement Time to Know's digital platform and interactive curriculum in the 2010-2011 school year. All told, 63 fourth and fifth grade classes will use Time To Know's technology. The iZone pilot sites are testing ways that content is taught to allow more customization.

Time To Know's digital platform currently covers grades four to six but Weiss says plans are in the works to expand it to grades three to nine. The company is also working on an English as a Foreign Language edition of the core curriculum in Arabic, and is seeking strategic partners in Spanish-speaking countries and other parts of the world. "The same digital platform can be used in primary schools in all countries," says Weiss. "Using our content tools strategic partners will be able to adapt it to the local education system."

Of course, schools adopting the system need to equip each classroom with a projector and provide every teacher and every student with laptop and wireless Internet connectivity. But since the software is Web-based no time or money is lost installing the software on computers.

Time To Know prides itself on the very user-friendly interface it has developed for teachers. Only two days of orientation training is needed, Weiss says. Teachers can plan their lessons by adapting the core curriculum to fit their teaching styles and local requirements, either by selecting pre-defined lesson sequences containing animations, exploration activities, games and videos, or by mixing and matching to create their own.

Teachers control what's happening in the classroom through a digital dashboard that lets them launch, pause, and switch learning activities on each student's computer or on the whiteboard. Teachers also can shift between class wide, group, and individualized instruction.

As the lesson progresses, students are asked to answer questions on their laptops, and their progress is forwarded to the teacher automatically. The platform then lets teachers assign, in real-time, individualized assignments that match each students' grasp of the subject.

Allowing students to learn at their own pace and according to their own proficiency makes the complex task of teaching students with differing needs easier for teachers, says Weiss. It will also help schools save money because classroom sizes can be bigger without negatively affecting students, he says. Weiss says that adding just one student per class will pay for the price of the software. Pricing depends on the number of students using the system and the amount of content they consume.

Of course, integrating technology into the heart of a school's curriculum will require some tech support. Weiss says he figures that every school with 500 students or more will have to start employing at least one IT specialist. "Any organization using tech in a meaningful way cannot do without an IT person," he says.

The involvement of Amdocs' Shmuel Meitar was crucial to Time To Know. He is not only a financial backer but also the co-founder of Ramat Gan-based Aurec Group, which provided resources and expertise to the startup. Aurec is an international investment group with a 40-year track record of building more than a dozen operating companies from inception to maturity in industries such as media, communication, enterprise software, and advertising. Amdocs is itself a spin-out of Aurec.

The next step is for Time To Know to find strategic partners that will help it expand internationally. "Our strategy is to find very strong local partners who will be able to take our technology and knowhow to create the system and content for the local country," says Weiss. "We are looking for powerful publishers or an IT company with the capability to pedagogically and technically support our system."

There is a strong incentive for schools around the world to move to 21st century teaching methods, says Weiss. Students who use multimedia tools outside the classroom don't learn effectively in classrooms using outdated, dry methods such as "chalk and talk" or "drill and kill." And, teachers have difficulty tracking students' process without the benefit of real-time hard data, meaning many students end up falling behind.

But the real selling point may very well be economic. Time To Know's software will save money because schools can add more students without hiring more teachers. What's more, schools using traditional methods are not churning out students prepared for 21st century careers. If Time To Know can help solve that issue it could positively affect the global economy—making a tough assignment a little easier for governments around the world.

View the original article here

Nokia's Results Sag Amid Faint Hope

By most measures, the world’s largest maker of mobile phones delivered disappointing second-quarter results on July 22. Revenues grew less than 1 percent from the same quarter a year earlier, to €10 billion ($12.89 billion), and profits plummeted 40 percent, to €227 million ($292.5 million), below consensus analyst estimates of €285 million.

Nokia held onto 33 percent of the mobile phone market, but the average selling price for the 111.1 million phones it shipped in the quarter fell to €61 ($78.60) from €64 ($82.46) a year earlier. That helped pull down its operating margins on handsets and services to 9.5 percent, from 11.6 percent a year earlier.

Was there any good news? You have to dig down a bit to find it, but Nokia reported a few bright spots. The market for smartphones—higher-priced devices that typically support e-mail, multimedia, wireless browsing, and downloadable apps—is where Nokia’s shortcomings vs. rivals Apple and Research In Motion has been most evident. But in the second quarter, the Finnish company sold 24 million such devices, up 42 percent from a year earlier, according to market researcher Strategy Analytics. The overall smartphone market grew at about the same rate, so Nokia held its share from a year ago, at 40.3 percent, and actually grew share slightly from 38.8 percent in the first quarter of this year.

This seems an astonishing idea, given the rise of the Apple iPhone and continued high visibility for RIM’s BlackBerry devices. What accounts for Nokia’s relatively strong showing (RIM had 18.8 percent of the market in the second quarter and Apple had 14.1 percent, both slightly down from the first quarter, according to Strategy Analytics) is Nokia’s vast powers of global distribution and a preponderance of lower-end models in its lineup that appeal to aspirational buyers in emerging markets.

The result, of course, is that Nokia smartphones sell for a lot less, on average, than those from rivals. Average prices in the second quarter fell to €143 ($184) from €181 ($233) a year earlier. By comparison, Apple’s smartphones generate $635 each in hardware and services revenues—which helps give Apple far better margins. Still, it’s arguable that selling nearly 4.4 million more devices than your next two rivals combined gives Nokia a certain pride of place.

Whether that will translate into a better array of online services and wider range of downloadable apps remains very much in doubt. Apple claims to offer more than 250,000 iPhone software programs now in its App Store, whereas the number of apps available for Nokia's Symbian operating system through the company's Ovi portal, though undisclosed, is thought to be only a fraction as many. For now, Nokia and Symbian are losing the battle for developer mindshare in creating the sexiest and best-selling smartphone apps.

Underscoring that point, Technology Business Research in Hampton, New Hampshire notes that many of the models counted as "smartphones" in Nokia's results, "lack the capabilities of modern smartphones from competitors." In a research note entitled Nokia's Results Demonstrate a Failure to Innovate, TBR analyst Ken Hyers argues that non-competitive low-end models have "led directly to [Nokia's] share declines in the U.S.," where the company sold just 2.6 million phones of all kinds in the second quarter, down 19% from a year earlier. Without an improved U.S. presence, the company stands little chance of recapturing momentum among software developers.

Nokia has a plan to fight back, which rests largely on two new software environments. The first is an overdue third-generation version of Symbian, called Symbian^3, that adds new features and will ship inside a new smartphone, called the N8, by the end of the third quarter. TBR is dismissive of the software, saying it "lags capabilities offered by the Android and Apple iPhone OS." And Strategy Analytics warns that limited distribution of the N8 in the U.S. means it "may not achieve its full sales potential." But Nokia chief executive officer Olli-Pekka Kallasvuo said July 22 in a statement that the N8 "will have a user experience superior to that of any smartphone Nokia has created," and promised that it and subsequent Symbian^3 devices will "kick-start Nokia's fight back at the higher end of the market."

Further down the road, Nokia will introduce a more powerful Linux-based operating system called MeeGo that it is creating with Intel. In development for years under the name Maemo, the software is meant to be powerful enough to drive sophisticated next-generation smartphones as well as other wireless-connected devices such as netbooks and tablets. Question is, will it be too late?

Nokia is still a giant in mobile phones and it has so far staved off disaster in smartphones, though the drumbeats of doom are growing louder. More quarters like the one reported on July 22 might shorten the company's horizons or provoke a further management shakeup. Stay tuned.

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Ericsson Charts Changing Usage of TV

The way consumers use television is changing rapidly, with 70 percent of viewers now streaming, downloading, or watching recorded broadcasts on a weekly basis and half accessing on-demand TV or videos via the Internet at least once a week.

Those are among the findings in a new study released Aug. 25 by the ConsumerLab research group at Swedish telecom equipment maker Ericsson (ERIC). Conducted in seven countries (China, Germany, Spain, Sweden, Taiwan, the U.K., and the U.S.) with a sample representing 300 million people, the survey is part of Ericsson’s ongoing efforts to understand how consumers behave and what they think of telecommunications and media.

The study findings confirm that patterns of media consumption are undergoing a major transformation, thanks especially to the Internet, mobile networks, and the emergence of digital devices such as the Apple (AAPL) iPad tablet.

To be sure, some 93 percent of respondents still watch conventional scheduled TV broadcasts at least once a week. But a growing number are demanding the ability to consume TV content when and where they want it—at a later date, via time-shifting digital video recorders (DVRs) or on-demand services, and on devices other than traditional TVs, such as mobile phones or laptops. In what’s likely good news for gizmos such as the iPad, 37 percent of respondents said they would be interested in using a tablet in conjunction with their TVs.

“Consumption is fragmented and complex,” said Anders Erlandsson, Senior Advisor at Ericsson ConsumerLab, in a press release about the survey findings. “There are few established consumption patterns, and it’s a trial-and-error market with lots of curiosity around it.”

The study identified some anomalies between consumer spending and usage patterns. For instance, respondents shell out an average of €38 ($48) per month for TV services—broadcast (cable, satellite, DSL), pay-per-view, and on-demand. Broadcast accounts for 60 percent of their total outlay, while on-demand is just 37 percent.

Yet of the 25 hours per week, on average, that consumers spend watching TV, only 43 percent is on broadcast or premium services, while 55 percent is time-shifted or on-demand TV. Ericsson argues that this gap in “wallet share” between what customers pay for and how they use TV augurs a shift in future spending patterns that service providers must anticipate and exploit. “It is clear that consumers are not paying for what they use the most,” the company said in its press release.

What are the opportunities highlighted in the survey? Ericsson found that more than 50 percent of respondents would like to connect their PCs to their TVs to watch online video—from sources such as YouTube (GOOG) and others—or to view photos or browse the Web on a larger screen, more comfortably, and with groups of people. Yet making such connections today can be frustratingly complex.

Another key finding: 40 percent of respondents say that “immediate access” to chosen content is very important to them, suggesting a shift from owning videos to accessing programming on demand.

Most importantly, Ericsson says that service providers must devise ways to align consumer spending and usage. Thanks to the “everything should be free” Internet mindset and a growing shift to TV consumption on PCs, traditional service providers risk seeing the value of their offerings diminished. Yet, “if done right,” Ericsson argues, “consumers will reallocate their TV spending to new alternatives.”

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Apple Supplier Foxconn's Boss Wins Support

Terry Gou, the embattled boss of Apple’s outsourcing manufacturer Foxconn (part of Hon Hai Precision Industry) has an unlikely ally in media tycoon Jimmy Lai. Lai’s chairman of Next Media, best known in the West for its animated coverage of news events like Tiger Woods’s car crash and JetBlue flight attendant Steven Slater’s emergency exit. The Hong Kong-listed company is also the publisher of Taiwan’s number one newspaper, Apple Daily, and a popular newsweekly, Next Magazine, both famous for their hard-hitting, often tabloidy coverage of the news. With Foxconn still struggling after a series of worker suicides called attention to the hours, pay and conditions at its Chinese factories, the company is taking hits. Last month a group of Taiwanese academics called Gou’s company “the shame of Taiwan.”

Lai doesn’t buy that. Such statements are “bulls—t,” says Lai, who stopped by the Bloomberg office in Hong Kong for an interview this morning. Gou’s critics, the media boss says, don’t give him enough credit. “The guy has built factories, and provided so many jobs to China. This is tragic, that some people jumped. But you can’t just say it’s the shame of Taiwan. The guy still has people lining up to join the company.” Lai says the suicides could have happened anywhere. “Imagine when people have to leave their hometown and live in a small dormitory where people have no relatives. This is a very difficult, very tough life,” he says. “It’s just the nature of the factory make up. You drag people away from their life, that makes life very difficult.”

Lai’s publications haven’t shied away from covering the company and its difficulties - and while Foxconn in the past has sued journalists who wrote critically of the company and its labor practices, Lai says doesn’t see Gou or Foxconn trying to intimidate the media now. “The guy knows he’s in deep s—t; when somebody’s in deep s—t, it’s difficult to intimidate anybody. For him to think he can intimidate the media, I don’t think he’s that stupid.”

Update: Here’s some more on how Foxconn is handling the fallout from the suicides. According to this report from Bloomberg News, a Chinese newspaper Secutimes.com reports Foxconn is testing would-be workers at a new plant in the central city of Zhengzhou on their ability to handle stress. An applicant has to take a test, my colleagues write, with 70 questions “including evaluations of the effects of sleep deprivation, depression and loneliness.”

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'Shame Games' Put India Further Behind China

Barring any more disasters, the Commonwealth Games will open in New Delhi on schedule after all. The fact that the games won’t be delayed or cancelled is a victory for India’s beleaguered Prime Minister Manmohan Singh. Still, the games have already proved to be a disaster for the country and even if the rest of the games go off without a hitch, the images of crumbling infrastructure and filthy conditions will be hard to shake. The “Shame Games,” as an Indian magazine has dubbed them, will just reinforce the idea that corruption and mismanagement prevent India from matching the achievements of China.

American readers might be puzzled, asking who knows or cares about a second-tier event like the Commonwealth Games. Indians do care, though, and they long ago pointed to Delhi 2010 as India Shining’s answer to China’s success in staging the 2008 Olympics. This would be an event showing how India had overcome its corruption and mismanagement demons. The current failure therefore is about more than just whether some athletes don’t show up because of reports there’s poop on the walls in the living quarters. Here’s what Economic Times of India columnist Sudeshna Sen writes: “The disaster is economic and political. A setback to the country’s economic future , its geopolitical standing, its clout in places like UN and G20, et al. I don’t care what the Sensex is doing — we’re heading straight into Christmas bonus time when international traders need to spice up their earnings — the games disaster is going to make life very, very difficult for any politician, businessman, corporate, investor or diplomat in the future. Every single overseas investor who is being wooed for trillions of dollars to invest in India’s infrastructure will think thrice. Forget China and the Asian Games. Dear everyone, India is no longer considered in the same league as China, whatever we may wish to think.”

But China has plenty of corruption problems, too. And there’s no shortage of inept Chinese officials. So why does China succeed where India fails? Here’s one theory. In China, which executes more people than any other country, high level officials who screw up badly may face the death penalty if the country becomes an international laughing stock because of their actions. Consider the former head of the State Food and Drug Administration, Zheng Xiaoyu, executed in 2007 after a series of Made-in-China scares involving tainted food and drugs. Two people implicated in the tainted milk scandal, which left several children dead, thousands of others sickened and countries around the world shunning Chinese dairy products, were executed last November.

India, to its credit, rarely imposes the death penalty. But it rarely imposes any other penalties, either. The notoriously slow Indian legal system, where cases can languish for decades, makes it easy for corrupt officials to go ahead without any fear of punishment.

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China's Huawei Overcomes Opposition in India

In the U.S., Chinese telecom equipment manufacturer Huawei Technologies is encountering new opposition from Republican senators. Huawei has had its share of political problems in India, too, with New Delhi putting Huawei and Chinese rival ZTE on a blacklist earlier this year because security officials worried about the risk of Chinese infiltration. “The Indians are incredibly paranoid about China,” David Zweig, a professor of politics at Hong Kong University of Science & Technology, told me at the time. (Read that story here.)

But the Chinese company is making progress in overcoming opposition in that market, with the Indian government easing up on its ban. On Monday, Indian operator Tata Teleservices said it is buying 3G equipment from Huawei. This comes just a few weeks after Huawei announced an earlier deal with the Indian operator to provide CDMA equipment in Mumbai.

Indian security concerns aren’t limited to Huawei and other Chinese companies, of course. Look at what RIM has had to go through in order to keep New Delhi from kicking the BlackBerry out of India. http://www.bloomberg.com/news/2010-09-01/india-asks-rim-google-skype-to-set-up-local-servers-update1-.html Huawei’s breakthrough is probably a sign that the company made enough concessions to satisfy India’s security officials. It’s also a sign, though, that for all the rhetoric about the threat from China, Indian companies can’t afford not to do business with Chinese suppliers. As Insead professor (and sometimes Businessweek.com columnist) Anil Gupta told me a few months ago, Chinese equipment makers like Huawei enjoy a big price advantage over Western competitors. “We are talking about very competitive tech at 30% lower price; in a very capital intensive biz, that is important,” he said. As Indians look to spend to fix their woeful infrastructure, “India as market becomes the most attractive for capital goods from China. And because of China’s cost advantage, China becomes the most attractive supplier base.” For the two Asian giants, that co-dependence could help both countries put aside their past hostilities and work together.

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