The administration on Friday placed the nine countries on a “priority watch list” that will subject them to extra scrutiny and could eventually lead to economic sanctions — if the administration decides to pursue complaints before the World Trade Organization.
In addition to China and Russia, the other seven countries targeted were Argentina, Chile, India, Israel, Pakistan, Thailand and Venezuela.
Ballmer started a wave of speculation at a press conference in Belgium when he suggested that the June 30 deadline could be changed. “If customer feedback varies we can always wake up smarter, but right now we have a plan for end-of-life for new XP shipments,” he said, according to Reuters.
'The Dates are Right'
A spokesperson from Microsoft's public-relations firm, Waggoner Edstrom, told PC World that the company's research had led it to conclude that “the dates are right.” Microsoft believes “we've made the right accommodations for customers in certain segments who may need more time to transition to Windows Vista,” she said. “But as Steve noted, we maintain a constant stance of listening to our customers and our partners. That's what is guiding our plan, and will continue to guide us going forward.”
The anecdotal evidence suggests otherwise. More than 170,000 people have signed an online petition spearheaded by InfoWorld magazine to “Save XP.” The petition calls for Microsoft to keep XP around “indefinitely. Not just for another six months or a year but indefinitely.” And enterprise adoption of Windows Vista has so far been tepid.
“Ballmer's cryptic comments suggest that although they say they listen to customers, they're hard of hearing,” said Galen Gruman, the InfoWorld editor who launched the petition, in an e-mail. “On one hand, Ballmer's comments acknowledge a demand for XP beyond June 30, but then he indicated that demand is trivial. I believe he's wrong.”
Dell Pushing Back
Gruman foresees a rising chorus in favor of XP as the clock counts down to the deadline. “I believe the voices for Microsoft to change will only grow louder as we get into the final 60 days of XP sales, as more and more people wake up to what is happening,” he said.
One of Microsoft's “accommodations” is a downgrade option in which organizations making volume purchases of Vista Business and Ultimate can license XP instead. Microsoft is also continuing XP sales to manufacturers of small-form, low-cost PCs like HP's new Mini-Note.
Dell recently announced it would take advantage of the program to offer XP on several home PC models — not just on a CD for consumers to install themselves but installed as the default operating system. “If Microsoft wants to stick to its official June 30 deadline but let PC makers work around it through the downgrade option so Microsoft can still claim a Vista sale, well, that's better than completely killing XP,” Gruman said.
Business Sales Critical
At the end of the day, despite Microsoft's current resolve, “end-of-life scenarios are not written in stone,” said Charles King, principal analyst with Pund-IT, in a telephone interview. June 30 is an extension of a previous January deadline, and support for Windows NT was pushed out several years, King noted.
While Microsoft can show gains in Vista simply because it will be installed on all new computers, the critical question is business adoption.
“Consumers just use what they get,” King said, “but for businesses with thousands or tens of thousands of users, if a new operating system is not predictable and stable, if it's so different people have to take time out of their days to learn how to use it, business will not adopt it.”
Microsoft will be watching Vista sales in the enterprise “very carefully,” King said. Ultimately, “if they produced a product that doesn't resonate, you just have to heave a sigh that you made a mistake and move on. You can't force customers to buy a product. If they look at the market and believe Vista is endangering the goodwill they have with customers, they'll do the right thing and walk away.”
CEO Daniel Hajj said in a conference call Friday that third-generation services such as wireless broadband in new markets would boost sales by year’s end and help the company recover.
After the company, controlled by Mexican billionaire Carlos Slim, reported Thursday that its first-quarter profit fell to $1.3 billion, its stock fell 12 percent early Friday and dragged down Mexico’s stock market index.
Hajj attributed the decline in earnings to spending on introducing 3G wireless networks in Mexico, Colombia, Peru, El Salvador, Honduras and Nicaragua. The company now offers 3G networks in 14 countries.
He also said higher financing costs resulting from an accounting change cut into profits.
“We feel that today America Movil is in a very good position,” Hajj said. “We’re investing for the long term. We’re investing for next year, and we cannot decide (based) on one quarter or two quarters, the way America Movil is operating. I think for the long term we’re doing the right things for the company.”
The company said it added 5.7 million wireless subscribers in the first quarter, bringing its total to 159.2 million. The biggest growth occurred in the company’s home market of Mexico, with 1.5 million new customers; in Brazil, which added 953,000; and Argentina, Peru and Colombia, which each gained more than a half-million new wireless accounts.
Earnings before interest, taxes, depreciation and amortization, or Ebitda, increased 17.8 percent for the quarter, to $3.2 billion. First-quarter revenue rose 20.6 percent to $7.8 billion.
Hajj said America Movil expects to continue to return excess cash to shareholders in 2008 through dividends and buybacks.
He added that the company has no present plans to expand its operations in the United States, where it has 9.9 million prepaid subscribers.
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Associated Press writer Mark Stevenson in Mexico City contributed to this report.
The experience of Netherlands-based TomTom NV — which saw earnings fall 83 percent in the first quarter — suggests the market for stand-alone global-positioning systems is at a turning point.
“What we saw for the first time is that selling prices fell, but volumes didn’t improve enough to compensate,” analyst Eric de Graaf of Petercam said after the results were reported Wednesday. “It’s a signal the market is getting saturated.”
Some analysts believe that as stand-alone versions are overtaken by cell phones and other devices with navigation technology built in, GPS devices will become low-margin commodity products, like pocket calculators. But others think a smart company could turn GPS devices into premium products the way Apple Inc. made its iPod music player stand out from a host of cheaper devices.
For now, TomTom’s larger U.S. competitor, Cayman Islands-based Garmin Ltd., appears to be faring better by virtue of its greater range of products.
Including Taiwan’s MiTAC International Corp. — owner of the Navman and Mio brands — the top three GPS makers hold around an 80 percent market share, giving them scale advantages over smaller players. But competition is coming from many directions, including big names like Nokia Corp., Sony Inc., Google Inc. and probably Apple.
“TomTom and Garmin are branded well,” said Thilo Koslowski of Gartner Research. “But functionally there’s not much difference” yet among GPS devices.
In 2007 alone, including strong holiday sales, 33.9 million units sold, almost triple the 11.9 million sold in 2006. Now, 10 percent of U.S. drivers and 20 percent of those in Europe own a navigation device. But prices for basic stand-alone devices have fallen below $200 from $500 or more.
TomTom reported a net profit of $12 million in the first quarter, which ended March 31, down from $70.3 million a year earlier. Sales revenue fell 22 percent to $147 million. Some analysts now fear TomTom’s $4.63 billion bid to buy digital mapmaker Tele Atlas NV, also based in the Netherlands, could come undone.
MiTAC and Garmin have yet to report first quarter results. But sales figures posted on MiTAC’s Web site show a 15 percent decline in the first quarter. Garmin, due to report on April 30, hasn’t altered its guidance since February, when it said it expected strong sales growth in 2008 despite price declines.
Garmin benefits from offering high-end devices for aviation and marine navigation — and from reporting in dollars. Also, it plans to meet the cell phone threat with its own combination phone and navigation device later this year, and it has announced a partnership integrating AOL’s MapQuest into its devices.
By 2010, Gartner estimates, 500 million cell phones capable of navigation will cell annually, compared to just 95 million pure navigation devices. Most cell phones can’t yet match the easy touch interface of the devoted devices, but Apple’s iPhone offers evidence that that may not be true for long.
Other competitors are getting smarter too: Both Google and Microsoft have introduced the option this spring of taking traffic conditions into account in their mapping instructions, using traffic data from vendors to calculate time to travel instead of distance. Some drivers may prefer to stick with that option, printing route maps before they set out in the car. Others buy built-in navigation systems that integrate with a car’s design.
But analyst David Niederman of Pacific Crest Securities said many other drivers will still want stand-alone devices for their dashboards because they’re more straightforward and easier to read.
TomTom Chief Executive Harold Goddijn said on a conference call he believed 50 percent of drivers will eventually own navigation devices, leaving plenty of room for growth in the coming three to five years. He predicted that prices will stabilize in the current quarter, now that retailers are done selling excess inventory.
Garmin may be broadening its offerings, but TomTom Chief Operating Officer Alexander Ribbink said his company’s strategy is to focus on the in-car market, improving basic navigation and keeping the interface simple.
One upgrade TomTom recently introduced lets users share map corrections. Another embeds GPS chips in phones to collect and distribute real-time data about traffic conditions. Yet Ribbink was skeptical about the threat from phones themselves.
“Navigation on the phone is difficult for a number of reasons: it cuts into battery life and you have small screens,” Ribbink said.
The large market share of Garmin, TomTom and MiTAC should help them fend off competition a while longer.
But De Graaf of Petercam said a bare-bones navigation device can now be produced for $80 to $110.
And that leaves plenty of room for more price cuts.
Sugar for Windows
This week, Negroponte indicated that Sugar is not only a great interface for Linux, but for Windows as well. “Sugar is a very good idea, less than perfectly executed,” he wrote in a posting on an OLPC site. It needs to be “disentangled,” he said, from collaborative tools, power management, and other functions, so it can be modularized and evolve more efficiently.
He is also seeking to have it run on top of Windows, which has soured the enthusiasm of some for the XO. The laptop, if sold in the tens of millions worldwide as originally envisioned and if based on Linux, could become a key driver in moving that open-source operating system toward popularity on the desktop.
Negroponte has confirmed that OLPC has been in discussion for several months with Microsoft about a dual-boot version of the XO. In October, a Microsoft executive told news media that the company was spending “a nontrivial amount of money” on adapting Windows for the XO.
Negroponte, in his e-mail, said “some purism has to morph into pragmatism” as the organization reaches out to engage a wider community, and it is “absurd” to suggest this “forsakes open source or redirects our mission.”
Dissent in OLPC
Some of the developers upset about the current direction are inside OLPC. On Wednesday, OLPC developer C. Scott Ananian posted a reply on the organization's site, in which he publicly criticized Negroponte for not providing the resources to accommodate Windows development for the XO.
OLPC “has not hired any Windows developers” and has not adjusted its time line for such a port, he wrote. If you are serious about Sugar on Windows, Ananian told Negroponte in his posting, you need to immediately hire at least 10 Windows developers “and inform the deployment countries that we are placing a hold on new development” for at least six months while the port is completed.
Even with that effort, Ananian wrote, the result will be a new version of Sugar that will run no better than the one on Linux. “From an IT management perspective,” he added, “this is madness.”
The turbulence surrounding OLPC has not been calmed by the recent departure of Walter Bender, who had been head of software and content. He told news media that he left because of differences with Negroponte over OLPC's positioning.
Low-Cost Laptops or New Tech?
In his posting earlier this week, Bender questioned whether the goal of OLPC was “simply to get laptops into the hands of as many children as possible,” rather than developing open-source software better suited for third-world countries and for learning.
If it is simply getting as many laptops into children's hands as possible, he asked, and “if others are making low-cost laptops that run Windows,” why don't those laptops fulfill the goal?
Mark Margevicius, a research director with industry research firm Gartner, said OLPC's first mission has always been getting a laptop into each child's hands, by any means necessary — and not to be an incubation farm for new technology. The new technology, he said, was a means to an end.
If success is measured by the “ability to move some of the industry's giants, like Intel or Microsoft” to see the opportunity that awaited them among third-world children, Margevicius said, then OLPC has been a success. But if it's measured by the number of laptops it sells, he added, “the jury is still out.”
High street chains will be the next victims of cyber terrorism, some of the world’s elite hackers have warned. They claim it is only a “matter of time” before the likes of Tesco and Marks & Spencer are targeted. Criminals could use the kind of tactics which crippled Estonia’s government and some firms last year, they warned. The experts were members of the infamous “Hackers Panel” which convened in London this week at the InfoSec computer security conference. The panel includes experts in online spying techniques and so-called “white hat” hackers, independent investigators who look for flaws in corporations’ IT security in order to help the companies improve their defences. Previous panellists include Gary McKinnon, known as Solo, alleged by the US government to have hacked into dozens of US Army, Navy, Air Force, and Department of Defense computers. The “hackers” usually remain anonymous, “for security reasons”, but this year’s panellists agreed to break cover. Common cause First up was Roberto Preatoni, the founder of the cyber crime monitoring site, Zone-H. He told the audience that the attacks in Estonia were a harbinger for a new era of cyber warfare. “I’m afraid we will have to get used to this,” said Mr Preatoni, also known as SyS64738. “We had all been waiting for this kind of attack to happen. “Estonia was just unfortunate to be the first country to experience it. But very soon, our own [western] companies and countries will be getting attacked for political and religious reasons. “This kind of attack can happen at any time. And it will happen.” During the two week “cyber war” against Estonia, hackers shut down the websites of banks, governments and political parties using “denial-of-service” (DoS) attacks, which knock websites offline by swamping servers with page requests. As many of the attacks originated from Russia, the Estonian government pointed the finger at the Kremlin. But Mr Preatoni said that, having spoken to contacts in the hacking community, he was clear that “Putin was not involved”. “In my opinion, this was a collection of private individuals who spontaneously gathered under the same flag. “Even though Estonia is one of the world’s most advanced countries in IT technology, the whole economy was brought to its knees. “That’s the beauty of asymmetric warfare. You don’t need a lot of money, or an army of people. You can do it from the comfort of your living room, with a beer in your hand. Gate control His warning was echoed by Steve Armstrong, who teaches seminars in hacking techniques, at the SANS Institute for information security training. “If someone wants to have a pop at the UK, they are unlikely to go for the government web servers. They will go for the lower hanging fruit - companies which are seen as good representatives of the country. “The likes of Tesco, Marks & Spencer and B&Q can be seen as legitimate targets. “We have to get the message across to companies [to invest in information security]. “At the moment Chief Executives are only interested in the bottom line. But remember - if tesco.com goes down, that’s a lot of shopping.” Mr Preatoni said that the Estonian government’s repeated failure to thwart the attacks was proof that we still have “no good solutions” for denial of service attacks. The panellists then argued over whether Internet Service Providers should do more to tighten security, by helping customers’ protect their computers from being “zombified” by hackers for use in distributed DoS attacks. “Actually, I don’t think the ISPs should have any role in security,” said Preatoni. “In my opinion, that’s like asking the Royal Mail to be responsible for the quality of your post.” But his view was immediately challenged by the third panellist, Jason Creasey, head of research at the independent Information Security Forum. “I believe ISPs can play a phenomenal role in security, with a little bit of legal pressure,” he claimed. Net weakness He was backed by an audience member, Angus Pinkerton, of Lynks Security Consulting. “The only way to defend against a distributed attack is with a distributed defence,” he argued. “I think it’s unacceptable that ISPs are content to let their customers be part of bot-nets.” He challenged Steve Armstrong’s view that asking ISPs to perform security duties was “fundamentally, censorship.” “This is not about free speech,” said Mr Pinkerton. “Free speech does not entitle you to shout fire in a crowded theatre.” In the meantime, Mr Preatoni warned the audience it is “only going to get easier” to carry out a DoS attack, because he claimed the latest net address system, known as Internet Protocol Version 6 (IPv6), is actually more amenable to DoS. Later, he told the BBC that the rise in cyber attacks originating in China was a convenient cloak for western countries to disguise their own cyber espionage activities. “It’s too easy to blame China,” he said. “In fact, legitimate countries are bouncing their attacks through China. It’s very easy to do, so why not? “My evil opinion is that some western governments are already doing this.”
While prices for hardware is usually reduced over time, that could leave gamers who bought early feeling ripped off, Satoru Iwata said a day after the company reported record annual profits.
“I don’t think that model is correct,” Iwata said, despite signs that sales of the DS may be tapering off.
The Wii retails for about $250 in the U.S. and 25,000 yen in Japan, unchanged since its launch in November 2006. In contrast, Sony has slashed the price of its 20-gigabyte PlayStation 3 twice so far to boost demand.
Nintendo Co. expects to sell 28.0 million DS units this year through March 2009, down from 30.3 million last year.
Iwata said that while sales in Japan have slowed, the DS maintains strong momentum in the United States and Europe, with considerable room for growth. The DS Lite sells for 16,800 yen in Japan and $129.99 in the U.S.
Nintendo’s main focus is to keep gamers playing by continually offering new software, services and accessories. He hinted that there were new projects in the pipeline, but did not elaborate.
“Our biggest fear is for people who have bought the DS to shut it away in a closet,” Iwata said. “We want people to use it in their everyday lives.”
Still, the falloff in DS sales is a main reason why the company tempered its growth expectations this year after a nearly 48 percent surge in net profit last fiscal year to $2.5 billion and a 73 percent gain in global revenue to $16.2 billion.
“The speed last year was beyond our expectations,” Iwata said.
For this fiscal year, Nintendo projects a 26.3 percent rise in net profit and just a 7.6 percent increase in sales. It pegs a modest 8.8 percent climb in operating profit.
Like all Japanese exporters, Nintendo is wrestling with a stronger yen that threatens to erode the value of overseas sales, which accounted for 81 percent of total revenue last year.
Nintendo’s main driver of growth this year, then, looks to be the Wii — a runaway hit that has outsold Sony Corp.’s PlayStation 3 and Microsoft Corp.’s Xbox 360 since its release in November 2006.
With easy-to-play games and motion-detecting controllers, the Wii has done well by attracting new and casual gamers, including women and senior citizens.
Consumers around the world have snapped up nearly 24.5 million of the consoles so far, and Nintendo says it expects to sell 25 million units this year, even with a gloomy outlook for the global economy.
“Historically, the video game business hasn’t been influenced by economic swings,” Iwata said, adding that in tight economic times, people often opt to stay home and play video games rather go out and spend money.
Nintendo will release several new games this spring, including a racing game called the Mario Kart Wii. The Wii Fit exercise game, which has sold well in Japan, will also make its debut soon in the U.S. and Europe.
“Our earnings projection for the year is not based on hardware price cuts, and I don't think we are going to need them,” Nintendo PresidentSatoru Iwata told an analyst meeting on Friday.
Nintendo, which competes with Microsoft Corp (MSFT.O) and Sony Corp (6758.T) in the global videogame industry, currently holds the leading position both in the console and the portable game markets.
Iwata's comment came one day after the creator of game characters such as Mario and Zelda said its operating profit more than doubled in the year ended March, and forecast a further 9 percent gain this year to 530 billion yen ($5.08 billion).
The outlook fell short of market expectations but analysts said the company forecast is believed to be on the conservative side. Nintendo, Japan's third-largest company in market value, revised up its earnings outlook three times in the year just ended.
Sony Corp (6758.T) slashed the price of its PlayStation 3 with a 20-gigabyte hard drive by 20 percent to 49,980 yen ($479) before the product launch in late 2006, and lowered it further to 44,980 yen last year to spur demand, while Nintendo has kept the Wii price unchanged since its launch at 25,000 yen.
(Reporting by Kiyoshi Takenaka)
Net profit in the first three months of 2008 was to 2.7 billion kronor ($460 million), compared with 5.8 billion kronor a year ago.
Sales rose to 44 billion kronor ($7.4 billion), from 42 billion kronor in the year-ago quarter.
Ericsson reported higher costs in the quarter, related to recent acquisitions, restructuring charges and research and development investments. A 48 percent drop in profits at mobile phone joint venture Sony Ericsson also weighed on results.
Ericsson’s shares that have been battered since a profit warning last year rose sharply to 15.64 kronor ($2.65) in midday trading.
“This was a really nice surprise,” said eQ Bank analyst Jari Honko. “This shows that Ericsson is a shining star in the network industry.”
Honko said Ericsson’s operating profit beat the market consensus by about 16 percent. Despite Ericsson’s results, he cautioned that the network infrastructure industry was in a “difficult phase.”
Ericsson Chief Executive Carl-Henric Svanberg said his company “developed well in the quarter, considering the present market environment and the declining U.S. dollar.”
A weak dollar makes exports more expensive.
Still, he said, Ericsson continues “to plan for a flattish development in the mobile infrastructure market” in 2008, but that the professional services market “is expected to show good growth.
Jacob Pedersen, an analyst at Sydbank, said the report was very pleasing in relation to the market’s forecasts, but said “the question now is whether this is just a one-timer?”
“Are revenues just being pushed around between quarters or is Ericsson able to gain market share?,” he asked.
The numbers alone, and without comparing them with analyst expecations, actually showed a “pretty disappointing earnings development compared to the same quarter last year,” he said, adding consensus have come down a fair bit since the Ericsson share started its downward tumble last year.
Since the second half of last year, shares in the Stockholm-based company have plunged on the back of a surprise profit warning as well as turmoil in the world’s financial markets.
“The big test will be the half-year report,” Pedersen said, pointing to fairly downbeat magagement comments given for the coming quarters.
“They indicated that a larger portion of revenues could come from network rollouts rather than from software product upgrades,” he said, adding that the margins are greater on the latter.
Ericsson in February announced a cost-cutting plan that would lead to thousands of layoffs worldwide.
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On the Net:
http://www.ericsson.com