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September 2005 Archives

September 30, 2005

Software lemmings head for the platform cliff--a provocative post from Greg Gianforte

A guest column by Greg Gianforte, CEO of RightNow Technologies

How would you feel if your mechanic handed you a 125-piece wrench set rather than actually fixing your car? What if another mechanic then walked up to you with his tools and started arguing with the first guy about whose tools were better? You sure wouldn't feel like either of them was going to help you with your problem, would you?

Yet that's exactly what software vendors are doing today as they engage in platform wars – to the detriment of their customers and the industry.

-Oracle announces its Fusion platform, revealing a grand architectural chart that shows how they will exercise total control over their customers' computing environments.

-SalesForce.com unveils a platform dubbed "AppExchange" that enables customers to engage with unstable, third-rate software vendors more rapidly and conveniently than ever.

-SAP touts NetWeaver, which grafts a proprietary platform onto a collection of otherwise practical standards to render them impractical and non-standard.

-And, of course, Microsoft seeks to achieve global hegemony with a platform of its own: .NET.

Corporate customers, however, are not out shopping for new computing platforms or a better IT stack. They need business solutions that actually help them compete and succeed in the real world.

They also want something that no platform-obsessed vendor seems able to provide: a technology partner who can actually be held accountable for promised business results – such as increased revenue, reduced expenses, faster time-to-market, or improved customer satisfaction.

Yet, for some reason, software vendors continue with their platform fetish – despite the fact that platforms don't actually provide any tangible value.

AppExchange is a perfect example. It's a great way for a team of clever, untrained coders to package their software for mass consumption, despite the fact that they may lack a professional services organization, financial stability, or a credible long-term technology roadmap. But does any CIO really want to make a strategic purchase from a vendor like that?

Platforms usually aren't platforms anyway. They're "marketectures" that exist purely to rationalize bad acquisitions.

Is "Fusion" really the right name for the duct tape and rubber bands that will supposedly hold together Peoplesoft, JD Edwards, Siebel, Retek and Oracle applications? "Con-Fusion" is probably more apt.

One reason that vendors do the platform dance is that it generates hype. It also creates the fear, uncertainty and doubt that are always useful when you lack a solid value proposition.

Plus, when you architect a platform, you make the third-party developers and integrators responsible for actually doing something with that platform. So you can collect a lot of cash and still have absolutely zero accountability for what happens to your customers afterwards.

So what's the alternative to platform madness?

The answer to that question has two parts. First is the on demand delivery model. On demand eliminates the need to create a proprietary technology platform as a competitive differentiator. The IT stack only exists to support applications.

By taking the entire IT stack (including operating system, database, app server, web server) off the customer's hands, the on demand model renders identity of the stack's individual components meaningless.

The applications themselves must be capable of being integrated, customized and scaled as required – but the underlying "platform" should not be the customer's headache.

The second part of the answer is open source. Open source commoditizes the stack. MySQL replaces Oracle. Linux replaces Windows. TomCat and JBOSS replace Websphere and NetWeaver.

Vendors that are still trying to differentiate themselves in these commodity businesses are clearly headed in the wrong direction. Yet that is exactly what platform vendors continue to do.

So next time a software vendor makes an overblown platform announcement, someone should ask them some hard questions:

Why are you trying to co-opt open source instead of using it to deliver real value?

Have you forgotten how to create applications that actually solve problems, or is that just too much work?

How much will this platform ultimately cost me to adopt, and what will my quantifiable gains be once I've done so?

Software vendors should listen to their customers, deliver results, and charge a fair price for their products. Anything else is just a smokescreen for failure.

Outcast CEO Dinner Club--the place to be Thursday, even for B&O...

By Tom Foremski for SiliconValleyWatcher

It's 7 pm by the time I get out of my apartment and head over to the 4th Outcast CEO Dinner Club at the W. It started at 6pm, but the travails of a standalone journalist prevented me from getting out the door on time.

I hail a cab using the trusty Geek Beacon (my Treo screen waved in the air) and walk in just as they are about to sit down to dinner. Julia greets me and guides me to my seat.

And Emma spots me, and is a delightful host; and I'm soon sitting with a glass of wine next to Tim Smith of Outcast and Satish Dharmaraj of Zimbra.

We are all hushed; and Margit and Caryn take the mike, and say nice things about everyone.

While we eat salad, Keith Ferrazzi provides the entertainment for the evening. He's a motivational speaker; and soon some attendees are motivated to check their digital devices for urgent messages ;-).

Alas, my digital device says I have none; so I listen to the rest of Keith's pitch. Some are asked to stand up, sit down and hold their hands in the air, to which Tim Smith says that it's just like church; and he is right. But it also could be the hokey pokey. I check again, for urgent messages...

I found Keith interesting. He is really trying to get people to share intimate aspects of their lives; because such things create relationships, which are also good business relationships.

It's a tough message for the Geek crowd though. Spock, as in Captain Kirk, is the Geek model; mildly amused at human emotional chracteristics. And you know that Spock isn't going to share any intimacies. Spock won't tell anyone about his outcast life as a part-human, part-vulcan freak show. You have no idea how cruel Vulcan kids can be.

So Keith sits down; and we eat the rest of the dinner. Margit comes over and teases me that I now sport an attitude because of my blogger fame, and because I wasn't there on time. I claim that it's just the result of the pitiful life of a standalone journalist...which is true.

Satish from Zimbra is excellent company; and we soon find that we speak the same language. He was very pleased that I understood what he is up to, in a New York instant. Because to me, what he and others are doing is the future, or at least a good part of it.

Zimbra is doing an AJAX Outlook, and targeting the enterprise sector with a whole new class of AJAX applications. AJAX type applications are where things get disruptive and interesting very quickly...more on that later.

Here's a quick run through, my apologies if I didn't get to everyone:

My good buddy Om Malik, of GigaOm and Business 2.0 is there. It's his birthday, and he gets a birthday cake (but forgets it).

It was good catching up with Alex Gove of Walden VC, and Constance Loizos, one of the top VC reporters.

I chat with John Battelle who is pitching his fmpublishing advertising network. When I hear Om is in, I say: that's all I need to know, count me in too. John says he is limiting it to just the top 20 premium brands, which, dear readers, means that you are premium :-), thank you.

Lots of Silicon Valley hack pack, --Don Clarke, Dan Farber, Quentin Hardy, etc-- are there. So is Cory Johnson, who used to be a hack and now is in the hedge fund world and looking like it agrees with him. Scott Rafer says he's left Feedster, new venture on the way, more details coming.

I chatted for a long time with Liz Clinkenbeard, Amy Swanson, Reema Bahnasy. Let me not forget Mike Sigal, Tim, Virginia and many others...and there are many more tales to be told.

September 29, 2005

The Google Zeitgeist and the walking dead...imho

By Tom Foremski for SiliconValleyWatcher

Google's transformation, into a technology- enabled media company that publishes ads around software, is incredibly impressive.

Have you used Google Desktop and some of the other apps it has developed? I repeat: what is going on at Google is extremely impressive. And so is the acceleration of its business model.

And that is due to the company's ability to quickly create self-organizing business development teams, all leveraging a shared and scalable computing platform.

Not only that, Google seems to be able to integrate newcomers, be they individuals or companies, at record speed.

Yes, some talent walks out the door in such mashups; but there is much more walking into the company. And Google gets the newcomers integrated and productive faster than any other large organizations that I can see. You can see the results in the suite/catalog of software it has already built.

I think it is game over for a lot of companies now; and I think Microsoft is one of them. Unless it makes Office free right now, this minute, and figures out the business model later if it has to.

The game changed and nobody told Redmond

I think that a lot of people in Silicon Valley understand full well what is happening: that the game has already changed, and that there are new rules in play. People like Ray Lane at Kleiner Perkins, Joe Kraus at JotSpot, and many of the software engineers in the thousands of startups here, all of whom know what I'm talking about.

But I'd still like to spell it out, just in case Redmond is confused. Give away Microsoft Office now so that you can corral the largest populations of users. Even if you don't understand the business model yet. Do it now.

Then re-architecture your software business as fast as you can along the lines of the AJAX-type hybrid new client-and-server software architectures emerging --and sell ads around it. And you might get away with some monthly subscription revenues for some products, for a little bit at least.

Redmond flat earth society

It's probably too late for Microsoft anyway. It continues to state the importance of the PC over PDAs-cell-phones-or-any-lesser-enabled-digital-device. This is quaintly last century, a type of modern flat earther argument--not in the Friedman sense of course--but in the clueless sense.

In some ways, it is touching to see such steadfast loyalty to a cash cow that created a lot value for our global society, but is, quite probably, fading fast. That cow still looks fat; but we know that cows also produce incredible quantities of methane.

[My apologies, dear readers, for the distasteful image this metaphor may have sparked, especially if you are eating while reading.]

Am I unfairly harsh on Microsoft? This is all cheap digital ink. It's Microsoft shareholders who will be the harsh judges; and some valid question from them might be:

How did Microsoft lose the desktop?
How did the senior management let Google, and others too,take away the desktop and the apps?
Why did you invest the billions from the only profitable business group you had, and build many unprofitable businesses and ignore your core franchise?

Those are fair questions, I would think.

...To come: Part II on the Google Zeitgeist. . . [BTW, if David Krane or Ray are reading this, my invite to the Zeitgeist thingie seems to have been eaten up by my spam filter, so if you could resend that would be wonderful...thanks!]

[Read]

A day in the valley: Seven startups at Sevin Rosen Funds; AOL's Ted Leonsis says AOL should have gone open years ago; Google's Raymond Nasr is leaving...

By Tom Foremski for SiliconValleyWatcher
Wednesday was another good day to be a journalist blogger in Silicon Valley.

I should go to bed; but this medium is sometimes so compelling, and captures the fun of journalism so well, that it is difficult to stop. Some of you know what I mean...

Hitching a ride into the valley

One of the day's challenges was how to get to a showcase of seven startups at Sevin and Rosen Funds, a venerable valley VC institution.

The VC firm never went for the dotcom low-hanging fruit, and feels uncomfortable blowing its own horn. Which is why I was intrigued with an event they hosted in their gorgeous Palo Alto offices (designed by one of the partners.)

Diane Schrieber, managing director of Spark PR was kind enough to give me a ride to Palo Alto, because my car was in the repair shop after an unfortunate Bullitt-style "bottoming out" on the streets of San Francisco, which required a new oil pan and engine mounting.

The ride to Palo Alto was a good chance to catch up with Diane and Spark PR, and hear about some of their new clients, such as Skype and one of Yahoo's largest business groups, which includes the My Yahoo! portal--still one of the best products on the internet.

Sevin startup Luminescent shines

The Seven at Sevin event was already underway when we arrived, but we caught at least five of the company pitches.

My pick of the group was Dave Fried's Luminescent venture. It targets one of the largest pain points in the chip industry: creating the masks that are used to etch the wires and transistors in chips.

Making the masks has become very difficult and very expensive and 50 per cent of the masks have to be redone. A state of the art chip design can cost several millions in mask costs--and that means you need to have a successful, high volume chip, which is never guaranteed.

Mr Fried used to run Applied Materials' Services division, a large business group at the world's largest chip equipment maker. This guy knows the problem areas in that industry and his company has figured out the mathematics needed to model wafer mask design--one of the most challenging problems in computing--to greatly reduce the cost of creating a set of chip masks.

The silver lining in layoffs

It was interesting to chat with Mr Fried about all the thousands of layoffs and cutbacks that Applied Materials has gone through. It could be argued that it became a victim of its own success in pushing the chip industry from 200mm silicon wafers to 300mm.

The chip industry got a 2.5 times immediate productivity increase, not to mention further gains from shrinking chip designs, copper, SOI...

Applied and its competitors couldn't get out of the price war that shrank margins to levels barely able to support research and development. And the rise of the huge foundries made capital investment far more efficient--also not good for business.

But the Applied Materials layoffs have let loose a wave of very talented people, who are continuing to innovate in new startups and help drive down the cost of chips, which then leads to all sorts of new businesses...the cycle of Silicon Valley.

The Seven at Sevin also included Alien Technology--the rfid chip leader, Alder Biopharmaceuticals, Nanomix with its carbon nanotube based gas detector chips, Neoscale Systems targeting data security through a novel key management system, Solidcore Systems which creates tightly controlled embedded computer systems, and Ultracell with a methanol based fuel cell.

AOL could have been the internet

Britt Cutsforth, also from Spark PR, was kind enough to drop me off at the Churchill club, somewhere in Sunnyvale, where Ted Leonsis, vice chairman of America Online, was on stage with Mitch Kapor, Lotus Development founder.

AOL recently opened its gates to the world--about fifteen years too late I would say. And interestingly, it is during a time when every one else is moving to walled communities...has AOL missed the tide again?

I caught the last half hour and it was interesting, here are some quick highlights.

Ted Leonsis:

-AOL should have been open from the very beginning. I knew it years ago, but I guess I wasn't brave enough or loud enough to push for that.

-There are more internet users outside of the US. I predict a lot of M&A in foreign markets as companies look for a jump start.

Mitch Kapor slams Silicon Valley public school system

Mitch Kapor was talking about the sad, sorry plight of the local education system when I walked into the room.

That is a subject dear to my heart. He was talking about a mentoring program he is involved in, which works with students from disadvantaged communities, and he says the success rate is incredible. The kids respond so readily within such programs, he said, and they do all the work -- they just needed a mentor.

He said such programs are people-intensive, but he believes they can be scaled. He also said that Silicon Valley's business interests are suffering because the rest of the world looks at the region and sees it has such a poor public education system. And that is not cool.

I have often been asked this question: How can Silicon Valley say "this is where the future is invented, this is the global capital of innovation;" and yet its public schools are not showcases, but basket cases?!

When I asked John Chambers, CEO of Cisco Systems, about this not too long ago, he admitted it was embarrassing, but said that the public school system was broken.

I think it can be fixed...but more on that later.

Raymond is leaving Google

Raymond Nasr, the current president of the Churchill Club, and Director of Executive Communications at Google, is leaving Google. His leaving party is this Wednesday, check your inboxes.

We were only able to exchange a quick nod and a wave so I'm relying on my sources--always very reliable--for information about this:-)

No word on Raymond's post-Google plans, but, he is a Fellow of Oxford University's Saïd Business School, and I do know the school will soon announce a $20m innovation center...

BTW, when is Google going to appoint a head of its Google Foundation?
Interviews have been going on for nearly 9 months now...I've got no shortage of big ideas, if that's what you need.

Back to Palo Alto

I next hop a ride with an old buddy, Uwe Maurer, who is making a name for himself as an international financier and who has introduced me to some very interesting German entrepreneurs such as Zooos(more on them soon) and Audio Bar.

I tag along as we meet some of his VC contacts in Copolla's in Palo Alto. Then back to the city as Uwe searches for CTIA parties but it's getting late, so we go to the Redwood Room, Uwe's current favorite haunt. It is late when Hans, his driver, drops me off home and I still have three more hours of work before bed.

BTW, Thursday is OutCast's 4th Annual CEO dinner event...this one is always interesting and not to be missed.

September 27, 2005

Trawling for stories at the CTIA show...

Openwave's David Peterschmidt and how Inktomi saved Yahoo; OQO--caught between a PDA and a notebook is a hard place to be; Gail Redmond, SozoTek's image enhancer; Audio Bar targets the anti-book masses; Lost my Treo brick and found it (sigh); ipsh! text message marketing king.

By Tom Foremski for SiliconValleyWatcher
It is CTIA week in San Francisco, and this wireless conference has brought in a lot of mobile technology companies. Mobile is definitely the hottest space right now in tech, and also the most challenging.

You need powerful software that can perform wonders in a device with limited resources. If you are a device maker, you have to have highly integrated chips that sip battery power yet can handle, Swiss-army-knife style, a wide range of communications standards, display and audio demands.

And you have to have great design too. Because for consumers, a cell phone says a lot about its owner, so the way it looks, sounds and the personal information it contains are important.

This point was made well by David Peterschmidt, chief executive of Openwave, when I met with him Monday evening.

Openwave is an interesting company in itself, but Mr Peterschmidt interests me more because he is one of Silicon Valley's legends. He has built many large businesses groups here and he knows more about the inner workings of Silicon Valley, (and where the bodies are buried ;-) than almost anyone else.

To most people, he is probably best known as the former CEO of Inktomi, which he grew from 20 people into the hottest search engine company of its time. Inktomi's search engine technology continues on, but under a different brand: Yahoo.

Inktomi was sold to Yahoo in 2003 and Mr Peterschmidt firmly believes that "if it wasn't for its acquisition of Inktomi's search technology, Yahoo would not have been able to compete against Google so effectively."

Openwave is best known for browser software that enables mobile phone companies to deliver a large number of applications to customers.

This is a key, strategic position in the market. And Openwave is determined to strengthen it further; this week it announced the acquisition of Musiwave for more than $121m, which adds a variety of digital music services capabilities to its portfolio.

OQO-the "pocketable" PC

I ran into Virginia Jamieson from OQO and I got to see a rather nifty mobile device the company just introduced, the OQO 01+.

It is an "enhanced ultra personal computer which comes with 512MB RAM, 30GB hard drive, USB 2.0, internal speaker, improved pen-based digitizer, car/auto charger." Here is more info...

It's described as a PDA with all the functionality of a Windows XP notebook. Which means you don't need to learn a new interface. The OQO is perfectly placed between a PDA and a laptop, yet I don't think that's a good place to be because of the form factor.

It is too large to be a PDA and too small to be a decent notebook. It has all the price ($1900) of a notebook but without the functionality. Yes, the guts are the same, but the keyboard is a thumb keyboard. I can thumb on my Treo 600; but I can't do it for long.

I'd rather have a 12-inch Centrino notebook sans optical drive. And the OQO doesn't even have a camera(!) I'm clearly not the target market...

Here are some enthusiasts though, at Engadget...

SozoTek: Fixing camera phone images

Imaging is a large theme at CTIA; and phones are coming out with ever-larger mega-pixel cameras built in. The image quality, however, is not that great. But SozoTek has an interesting solution.

I spoke with Gail Redmond, the president and CEO of this Texas based company, who said the solution to better camera phone images lies within the carrier network.

"Our technology dramatically improves the image when you send it from your phone to someone else," she said. The technology sits on the carrier's servers and intercepts images on-the-fly, using sophisticated image enhancement technology developed at Kodak and IBM.

There is no denying the market size and hockey-stick growth projections around mobile phone imaging, and such services might help wireless carriers differentiate their services. But SozoTek is the lone provider of such technologies which means it has to educate the market, and the user.

That's a tough position but Ms Redmond seems tough enough from prior leading positions at Sprint and Telespree, to name a few.

Soccer and Manja at Germany's Audio Bar

German soccer fans are a primary target for Audio Bar, an interesting German startup. Erbil Kurt, who at one time was Deutsche Telecom's youngest-ever board member, has put together an interesting portfolio of images, ring tones and video clips--all designed specifically for small screen mobile phones.

And what I saw was very good. Mr Kurt has personally created most of the ring tones, images and audio himself. And he even traveled to Istanbul so that he could come back with a rare interview with one of Germany's top soccer personalities.

But it is not just soccer fans that interest Mr Kurt. "Did you know that 40m Germans have never bought a book?" he asked me. That's what surveys have revealed; and that is a business opportunity.

That's because it is a market that consumes its stories and information through images. And Japanese manja is the inspiration for several "story book" projects that Audio Bar hopes to sell a chapter at a time.

The demo I saw was very good, and reminded me of the Aha video "Take on me." It worked well in that small screen form factor.

Lost my Treo...

It's ironic that I seem to have misplaced (lost) my cell phone at the cell phone show, or rather during the evening festivities.

But, I can't say I'm sorry to lose my Treo 600--a brick of a phone and one of the least reliable devices I have ever owned. I got one of the first ones, but within a year, I was on my fifth Treo 600.

And it was not because I'm harsh on phones, it was because they would stop working. When I look at annual cell phone shipment unit numbers, I now wonder how many of those units are replacements for shoddy units...

And now I found it! Literally, as I finished the above sentence, my land line rang and my phone was found on the bar at 111 Minna.

ipsh!--marketing through short text messaging

And speaking of 111 Minna, I must mention my hosts ipsh! who threw a fun party at the art gallery.

The company is using SMS--short text messages in innovative ways in marketing and promoting events. And Ellisa Feinstein introduced me to some interesting people there that I'd like to follow up with at a later, and quieter time...

September 26, 2005

Fixed my RSS feeds...and My Yahoo feed too

. . . the forgotten communications channel--the telephone!
By Tom Foremski for SiliconValleyWatcher

My apologies, but the result of my geeking around with my blog software over the summer was that I accidentally messed up my RSS feeds and didn't realize it for several weeks.

For those that read SVW through their My Yahoo page, it might have seemed as if I had taken a rather generous amount of vacation time.

Not true: I've been filing lots of stories and scoops and exclusive stories as usual, but you had to come to the site to see them! You may have to click on the "add to My Yahoo" button again; but it should be working now.

Standalone journalism sucks

Also, I've suspended the email newsletter, and also the IonRSS.com web site, for a temporary hiatus so that I can rejig them and relaunch in a few weeks time. Sorry about that; but standalone journalism sucks.

Whenever I get a bit of money through my generous and very patient sponsors, I spend it on other journalists and geeks; but when money is too tight to mention those other times, I have to do a lot of things myself.

(Mike Faden always finds an hour or two to look over my shoulder and clean things up; and Chris Dichtel always rustles up a fun and interesting illustration--so I'm never totally "standalone.") But it usually means I have less time to engage in conversations on this site or via email.

My email inbox is totally out of control, with more than 8K messages to wade through (that's *after* the spam filter--I might need to just set fire to it and start again!)

The forgotten communications channel

So, if there is something you'd like to tell me that is time sensitive, call me on my cell: four one five three three six seven five four seven. It seems that these days hardly anyone uses the phone for business. . . it has almost become a forgotten communications channel :-)

Also, I'm not ignoring your emails on purpose, honest! I'm usually out most of the day, out and about collecting news stories and scoops and exclusive stories so I'm not sitting at my desk much.

And when I am sitting at my desk, I am writing stories and I have to finish those stories before venturing anywhere near my inbox for fear of losing three or more hours at a time.

Plus my recent apartment move and family commitments, and the usual demands of our accelerating red-shift modern lifestyle means that my email inbox has become obese and should probably be put out of its misery. Does anyone have a match?

News: Moreover picks a suitor . . .

By Tom Foremski for SiliconValleyWatcher

Silicon Valley Watcher has learned that Moreover Technologies, the San Francisco-based news aggregator, will announce within the next few days that it has been acquired by a much larger multi-national company.

The announcement is expected by the end of this month. The identity of the acquiring company and the purchase price are not yet known.

Moreover has been in play since earlier this year and several companies have expressed an interest in the company. Moreover has a strong relationship with Microsoft and is the primary news aggregator for the MSN service.

However, it is Moreover's enterprise business that is its main revenue generator.

Moreover was co-founded by Nick Denton, a former Financial Times journalist. Mr Denton is head of New York based Gawker Media, publisher of several popular online web sites such as Wonkette, Gawker, Gizmodo and Fleshbot. Mr Denton remains chairman of Moreover.

September 23, 2005

Silicon Valley Watcher wins excellence in media award: Best Bay Area Blog

Please excuse a few moments of horn blowing and a little crowing, but Silicon Valley Watcher has won the Best Bay Area Blog Award from the prestigious San Francisco Bay Area Publicity Club!

I met some of the members of the club earlier this year when I spoke at one of the organization's lunchtime events, organized by Ellisa Feinstein and colleagues. Don Clarke from the WSJ was there too, as well as editors from Wired and Cnet. And the Q&A afterwards was one of the best.

Thank you all and my apologies for not being able to accept the "Pubby" in person. I had already promised to be in New York at NYU on a panel with Joe Trippi at the Impact '05 conference. Otherwise I would have loved to have been there.

Here is some info on the awards:

The San Francisco Bay Area Publicity Club, a non-profit network of public relations professionals, announced today the nominees for the 9th Annual Pubby Awards. The "Pubby" award signifies excellence in media in 2005.

Nominees for the Pubby Awards are elected by the Club's Board of Directors and winners are chosen by ballot by current members of the Publicity Club. www.sfpublicityclub.org or by calling (415) 437-4440.

The Friday Wrapper: Woof! Woof! at OracleWorld; SVW scoop on PeopleSoft-Siebel; Java Fund success validates RSS fund; New York media decline continues; Google software could bridge digital divide

By Tom Foremski for SiliconValleyWatcher

Woof! Woof! Bow Wow Wow and Berlin wow Oracle World geeks

Thanks Larry, for a fun evening at the Oracle "Appreciation Event" Wednesday evening down at Pier 32 in San Francisco. Oracle bussed thousands of Oracle users to the show, fed them and let them drink their fill.

On the main stage Fountains of Wayne and locals Counting Crows played. But the place to be was in the Green Room where Bow Wow Wow and Berlin played killer sets and all the geeks held their camera phones high in the air. . . it used to be cigarette lighters in the old days!

Bow Wow Wow were surprisingly wow, a tight, tight rocking band. And as for Berlin and their lead singer Terri Nunn? A stunning performance and a stunning stage presence. She's the Stevie Nicks of 90s electronica with a touch of "Heart" and with a band that has distilled the essence of that genre perfectly, (including the dark mascara.)

{See: TerriNunn.com]

But there was a least one complaint earlier in the evening. "Last year this place was full of sushi," a database administrator at a large educational company told me.

This year it was quiche bits, and other bland foods designed for mass feedings. Larry's using the sushi money to buy more companies.

. . .
SVW scoop on PeopleSoft-Siebel merger talks!

Scoop! Silicon Valley Watcher scooped the rest of the world Tuesday, with being the first to post the news that PeopleSoft and Siebel tried to merge but couldn't agree on the leadership. That's straight from Ray Lane, former Oracle president and currently a partner at Silicon Valley's top VC firm Kleiner Perkins.

Did large egos get in the way of shareholder duties? If Peoplesoft and Siebel could have overcome their cultural barriers and merged it would have created the second largest applications company in the world.

That would likely have made it a more expensive buy for Larry, and a better sell for PeopleSoft and Siebel shareholders...and it might have provided other options too.

Oh, and BTW, Ray Lane said a KP China fund is on the way...

See our original post of Ray Lane's comments.

. . .

Java Fund success bodes well for $100m RSS Partners VC fund

Earlier this year I wrote about the launch of a new VC fund focused on funding companies using RSS--really simple syndication technologies. I said it reminded me of the 1996 Kleiner Perkins $100m Java Fund headed by Ted Schlein. [
See: We're off to the races...the first RSS focused VC fund is announced ]
However, I think my enthusiasm was misread somewhat and I caught a bit of flack in the VC community. There were several that said RSS investing was a bad idea, and that the Java Fund was a failure.

My enthusiasm was for the subject matter--$100m means there will be some great RSS stories to write. Whether the RSS fund succeeds or not is a secondary interest.

The other night at dinner with KP partner Ray Lane, I asked him about the Java Fund. He said that in response to the online chatter about the failure of the Java Fund, KP had released the ROI on the Java fund and said that it was very successful.

. . .

It's a shame that the center of the media industry moved and nobody told New York
. . .here's a forwarding address: Number One, Media World Ave., Silicon Valley, California.

It is a provocative notion, but a fair one I think :-) When I raised it earlier this week, some of New York's media watchers picked up on the post (such as I want Media.)

Dominic Basulto at Corante even suggested that the "Silicon Valley Internet media elite" is trying to start a "beef" with New York's midtown elite. His link likened it to the infamous, and ultimately tragic, West Coast versus East Coast Gangster Rap rivalries (just because I have a "Geek Life" tattoo doesn't make me Tupac.)

Well, first of all, thank you Dominic for describing a humble journalist blogger such as myself as being part of Silicon Valley's media elite. Second, now that you mention it, sure, why not? Bring it on, as they used to say. So whatchya got New York City? Is that a ticker-tape parade or pink slips?

I'm just kidding. I think it's terrible that New York's midtown media companies are facing such hard times. For example, New York Times this week said it would cut 500 jobs. And Knight Ridder said 100 newsroom jobs are going in Philadelphia.

We are talking about people here, people! This is not something to jeer about; I know how tough it must be for you New York media elites to make those tough decisions about people's livelihoods.

And you face the daily challenges of managing a swiftly shrinking business. Believe me, we in Silicon Valley understand, five years of dotbomb fallout has been brutal.

But, I just want you to know that we are here for you. If you still have an expense account, hop a Jet Blue and we'll give you a good old California group hug and we'll wipe away those tears.

And let me remind you of some words from a very clever man that might put a smile back on your face. Oscar Wilde said that when you're in the gutter, you can look down -- or you can look up at the stars.

(You could also look over to Silicon Valley and see the new media stars: Google, Yahoo, Ebay, Craigslist and more...but that would only upset you and there is no sense in that.)

Here is Corante:

Is New York still the center of the known media universe? Posted by Dominic Basulto
It may lack the intensity of the West Coast/East Coast hip-hop rap rivalries of the 1990's, but it looks like Silicon Valley's Internet media elite could be trying to start a beef with New York's midtown media elite. Tom Foremski of SiliconValleyWatcher weighs in on the current state of the media industry after a recent visit to New York City:

"It's a shame that the center of the media industry has moved to Silicon Valley and nobody told New York :-) I should write Mayor Bloomberg a letter about that. It would point out that many Silicon Valley companies such as Google, Yahoo, and Ebay, are in fact media companies. They are technology enabled media companies. They publish digital rather than paper pages but they carry content and advertising just like a newspaper or magazine paper page.

And our media industry is growing like gangbusters while New York's is not. Our media industry is hiring like crazy (Yahoo has 700 new positions to fill, Google a similar number) while New York's media industry continues to cut jobs and budgets..."

. . .

Open up your WiFi and help bridge that digital divide . . . Google makes it safe

Google has released a nifty utility that protects users of public WiFi hotspots from others that might want to steal their digital identities or conduct other mischief. The Google application encrypts your wireless broadcasts with 128-bit encryption--it's a steel vault around every airborne packet.

But it is much more than a nifty utility. Potentially, I think this could be a killer piece of technology. Because now, I don't need to lock up my WiFi network. I can hang the antenna out the window as was once very common in San Francisco, and share the cloud.

This is the way we bridge the digital divide ladies and gentlemen. This is how ubiquitous WiFi comes into being 5 years sooner, imho.

[See: http://wifi.google.com/download.html]

September 20, 2005

Peoplesoft and Siebel considered merging but leadership issue blocked the deal says Ray Lane former Oracle president

. . .and Java fund was huge success

By Tom Foremski for SiliconValleyWatcher

Whos Driving.jpg

I just got out from dinner with Ray Lane, one of the lead VCs at Kleiner Perkins and the former president of Oracle. I've got another meeting to rush off to, but I couldn't resist giving you some of the headlines from this meeting--more to follow tomorrow.

-Ray Lane said: Peoplesoft and Siebel talked about merging, and becoming the number 2 applications company in the world, but there was one key sticking point: they couldn't decide on who would run the company. It took Ellison to get them together.

Ray Lane said: IBM should buy SAP; they don't have an applications business, and I don't know why. I said that to Sam [Palmisano] just 8 months ago; and I don't understand why they don't want to be in the apps sector.

On Microsoft, Ray Lane said: Half of me thinks that Microsoft is irrelevant; but the other half reminds me that they still own the desktop. Unless Google can unseat them on the desktop...

...

In SVW, I recently wrote about the RSS VC fund, formed with $100m to invest in RSS related ventures. I got a lot of flack from people saying it was a lame idea. I said it reminded me of the Kleiner $100m Java fund in 1996, to which I got the response that the Java fund was a giant failure. Well, not so. Ray Lane says the Java fund was very successful; and they have published the ROI on that fund. Kleiner isn't ruling out further specialist funds; a China fund is on the way.

More tomorrow...

More crumbling in the crumbling print business model as New York Times and Philly papers announce hundreds of layoffs...

. . . the sharp end of the disruption process

By Tom Foremski for SiliconValleyWatcher

My recent post about the center of the media industry moving to Silicon Valley and nobody told New York drew some attention, especially from the excellent I Want Media web site run by New York based journalist Patrick Phillips.

In the post (fourth item) I said Google, Yahoo, Ebay are technology enabled media companies and they are hiring like crazy while New York's venerable media industry is not.

It was good timing given that the New York Times just announced 500 job cuts, and Knight Ridder said 100 newsroom jobs are going at the Philadelphia Inquirer and Philadelphia Daily News. Just the latest crumblings of a crumbling print business model.

It's not much fun being a journalist inside a crumbling business model. You are doing two or three jobs, everyone is in a bad mood, there are no pay raises, and on top of everything else, you are often expected to "blog" for your employer.

I tell my journalist friends that they should come and join me. It is far better to be on the side of the disrupting forces than to be on the sharp receiving end of the disruption.

It's true that I don't yet have much of a business model, but, I know that things can only get better on my side of the equation. Not much chance of things getting better on the print side of the business...

I'm not against print; it is just another distribution channel, as is is online. The problem is that if you have a business built on the old economics of the print advertising model, it can't be supported by today's advertising (print and online) ad revenues.

But if you start off from the lowest cost position (a blogger(s) in a bedroom :-) you will eventually inherit the earth. Because nobody can get in under your cost model (except for a blogger in a bedroom living free at their parent's house and using mom's computer!)

What worries me, however, is that online media business models are still being created and they cannot yet distinguish between good content and bad content. We need that virtuous cycle to be established so that the best content creators are rewarded and can re-invest in producing yet more great content.

Right now, the old media business models are in trouble and the new media business models are not yet in place.

What happens if we continue to lose the former and we are unable to create the latter?

Real men have fabs. . .chipmakers profit from making their own

By Tom Foremski for SiliconValleyWatcher

There was an interesting presentation by Bryan Lewis, chief chip analyst at Gartner Dataquest, at the recent Infineon media and analyst conference. His presentation and discussion with Robert LeFort, president of Infineon North America, indicates a trend against fabless chipmakers. [Infineon is a founding sponsor of Silicon Valley Watcher.]

For more than 20 years the rise of the fabless chipmaker has been a seemingly unstoppable trend. Fabs these days cost $2bn or more and are difficult to operate and you have to run them at near full capacity otherwise you lose lots of money.

It makes perfect sense to outsource the manufacture to foundries, which focus on perfecting the many manufacturing processes during the three month long production process required to create today's advanced chips.

But many chipmakers were reluctant to go fabless. In the early 1990s, T.J. Rodgers, head of Cypress Semiconductor, said "Real men have fabs," and this phrase was taken up by others, including Motorola, Advanced Micro Devices and Intel. It represented a catchy backlash against the fabless trend.

However, it is is difficult to argue against the economics of the fabless business model. A catchy phrase doesn't change the fact that fabs are extremely expensive and difficult to run effectively.

Why outlay more than $2bn in capital costs to build your own fab when you can email your chip design to a foundry in Taiwan or Singapore and collect your chips 90 days later?

Fabless and fabulous

That's why fabless chipmakers have done very well. For example, Qualcomm and Broadcom are fabless and are among the top ten chipmakers worldwide by revenue. And there are hundreds of other fabless chipmakers.

Owning your own fabs is something that Infineon has continued to do despite the strong argument for a fabless business model. Intel, AMD, IBM and others also build and operate their own fabs. And many of the chipmakers partner on fabs, or jointly work on research projects developing new manufacturing processes.

Now, as we push Moore's Law ever onwards, the pendulum seems to be swinging towards fab owners. What has changed is that there is a strong link developing between the design of the chip and the manufacturing process.

Each fab makes its chips slightly different from other facilities. It is all partly black magic in that the settings on the many machines make a big difference in how many good chips can be cut out of a silicon wafer.

This connection between design and the manufacturing process is much tighter these days than ever before. And optimizing chip designs to fit your fab is becoming a competitive advantage.

However, fabless chip companies mostly use design tools that do not take into account the many subtleties of the manufacturing process at their foundry. Yet the atomic scale geometries of today's chips are affected by tiny variations in the production process.

This means that those chipmakers that own and operate fabs will be at a competitive advantage over those that don't. They will get much better yields of good chips to bad chips. T.J. Rodgers was right [eventually:-) ].

[Read]

September 19, 2005

A report from New York city: Jim Finn moves up at IBM; Salon's comeback; the media industry moves to Silicon Valley (imho); Yahoo preps a new content channel; Trippi denies he received multi-million dollar payment; Jason Pontin's last weeks of freedom.

By Tom Foremski for SiliconValleyWatcher

My apologies for the scarce posts lately but I've been out and about the past week, collecting some interesting stories from New York City and last week's Impact '05 media conference organized by Plesser Holland Associates.

Here is a brief report on my trip with a nod to the three-dot style of the late Herb Caen, SF Chronicle's master columnist. More detailed reports are on the way too...
. . .

Jim Finn's new job

It was good to see a lot of familiar Silicon Valley faces out in New York. It sometimes feels like Manhattan is a suburb of Silicon Valley.

Among the familiar faces was Jim Finn, who until late last year was the head of communications at Oracle. Jim went back to work at IBM earlier this year, and is doing very well. He was recently appointed head of comms for the IBM Americas group, representing about a third of the company.

Jim says he intends to get out to Silicon Valley on a regular basis to keep his contacts fresh. Right now, he says IBM only has one person in San Francisco.

I said he should definitely come out here on a regular basis because IBM doesn't have much of a "mind" presence in the Silicon Valley area. It is seen very much as an East Coast company, even though it has more researchers and a longer historical connection with this area than almost any local company. The hard drive and many other breakthroughs were made at IBM's labs on the West Coast,

Microsoft, for example, is doing a lot these days to strengthen its image in Silicon Valley. A lot of Redmond gold is being distributed. And if IBM isn't careful, it might become increasingly seen as an outsider while Microsoft becomes one of the West Coast gang...

. . .

Salon is back on track

It was good to meet Joan Walsh, editor-in-chief of Salon. The last time San Francisco based Salon came onto my radar screen was last year when I was at the Financial Times and writing a story that the online magazine was quickly running out of money.

Things have changed and Salon is doing well and growing again, hiring journalists. Joan is a hard-boiled editor with newspaper ink in her veins. She can sniff out a great story even when thousands of other journalists are covering the same event, such as her coverage of the Katrina disaster.

Unfortunately, Joan and I decided to have just one more drink, on the basis it was just 9pm in San Francisco. We didn't think to consider the fact that we needed to be up by what would be 3am San Francisco time the next morning. . .

. . .

A blogger at the Yale Club

Yale Club.jpg I was staying at the Yale Club just next to Grand Central station in New York because hotel rooms were scarce and incredibly expensive. There was a big United Nations meeting and the Fashion week trade show was in town.

It was $500 for a single night at a Best Western, while other hotels were able to collect $900 and more per room.

Andy Plesser arranged my stay, and it was interesting staying at the club. Yale, as many know, is the alma mater for the Bush family.

Along the corridors leading to my room were photographs of groups of Yale classmen from the early 20th century. The photos were an interesting study. They had been taken over several decades, and although the dress of the Yale classmen differed, the look on their faces stayed the same. It was one of extreme confidence; the images almost swaggered.

That's what a good school will do: set you on your way in life with an extraordinary amount of self-confidence...and great personal connections too.

. . .

A media industry in decline

Whenever I'm in New York I feel like I'm in the coolest city in the world...this time it also felt like the hottest and most humid city in the world.

The warm, moist air stirred up by hurricane Katrina, made me melt into a walking puddle, especially when drenched by occasional torrential downpours.

New York is very cool partly because of its large media industry. The largest news and magazine companies have a heavy presence in midtown where I was staying. You can't avoid seeing their ticker tape news headlines whirl around their buildings, and their giant logos at night.

My alma mater, the Financial Times US HQ is there, and so are large offices of Reuters, CNN, Time-Warner, Hearst, etc.

But it's a shame that the center of the media industry has moved to Silicon Valley and nobody told New York :-)

I should write Mayor Bloomberg a letter about that. It would point out that many Silicon Valley companies such as Google, Yahoo, and Ebay, are in fact media companies. They are technology enabled media companies.

They publish digital rather than paper pages but they carry content and advertising just like a newspaper or magazine paper page.

And our media industry is growing like gangbusters while New York's is not. Our media industry is hiring like crazy (Yahoo has 700 new positions to fill, Google a similar number) while New York's media industry continues to cut jobs and budgets.

. . .

Trippi denies multi-million dollar payment (again)

I was on a panel with Joe Trippi, Howard Dean's political strategist. He masterminded an incredible political campaign that leveraged the power of the Internet and blogging to raise large amounts of money and mobilize millions of supporters. In the process, he changed all future polical campaign strategies.

I mentioned that in the political blogging world, there seems little concern about using the correct facts. Those communities prefer strongly partisan positions rather than factual discussions.

Joe Trippi said that he is a good example of that problem because it is often said that he was paid millions of dollars by the Dean campaign, yet the fact is that he did it all for free. And he is unable to completely set the record straight despite many attempts.

Also on the panel was Elizabeth Spiers, formerly of Gawker, and now editor of Media Bistro. She talked about how she and her friend Nick Denton started Gawker, which has become one of the most successful commercial online publishing ventures using the blogging platform. The moderator Brad King, web editor of Technology Review, kept things rolling and lively.

. . .

Yahoo plans content

Patrick Houston was at the Impact '05 conference. I hadn't realized that he had left Cnet five months ago and was now at Yahoo. He wouldn't say what he is working on except that it will move Yahoo towards some content creation in the tech space, along with aggregating content as Yahoo knows how to do very well.

Patrick, who also used to work at Business Week, said he couldn't resist the chance to build something new and try out some new ideas too. Look for an announcement of the new service in early 2006.

. . .

Oxford University's Google connection

After the conference, Patrick and I popped into a small reception at the club for a gathering of communications directors of the world's most prestigious business schools.

I had a fun time chatting with people from Paris, Barcelona, Dartmouth, and Oxford University's business school, and many others. Everyone was fascinated by the blogging phenomenon and how they might be able to use it to raise the profile of their business schools and top professors.

But I also pointed out that this phenomenon, combined with other factors, is part of a larger event that will fundamentally change the business environment for every company and result in what I call a "new rules enterprise." These are the dotcoms of this next stage of the internet and this time they do eat the lunch of larger competitors...

Interestingly, I found out that Oxford University will soon announce a ten million pound sterling (about $18m) innovation center. No word on where the funding is coming from. And the school wants to strengthen its connections with Silicon Valley further with guest lecturers and other events.

BTW, there is a strong Google connection here. Raymond Nasr, one of the senior execs on Google's communications team was made an honorary fellow of the Oxford Business school earlier this year.

. . .

Jason Pontin to wed

Bride&Groom.jpg Jason Pontin, the former editor-in-chief of Red Herring, was in good form and looking forward to his honeymoon. Yes, ladies, he is taken, and taken with a lady from Iowa.

Nuptials are set for the end of October followed by a honeymoon in India, for which he has contracted the services of a Indian "honeymoon consultant."

Anybody that wishes to offer Jason honeymoon consulting advice or best wishes, can reach him at MIT's Technology Review magazine in Boston.

Jason was recently made publisher of the venerable tech magazine, and he remains editor-in-chief. Jason was excited about having two jobs and the changes that he was going to make at the magazine.

I asked him how he liked living in Boston? He said it was "a bit like living in Leeds." [Leeds is an almost featureless industrial town in the UK].

. . .

Other familiar faces included Caroline Hacker from the Horn Group, Kent Holland, and Martha Papalia from Cnet.

And a big thank you to Andy Plesser and his wife Kathy, who shared their home with me, a lovely renovated farmhouse in a wood on Long Island. It was nice to be out in the country yet still be so close to such a large urban center, I slept like a log.

. . .

I'm still very backed up on my email messages, my apologies if you are waiting for a reply. I hope to get through the thousands of messages by the end of this week. Please don't hesitate to call my cell if it is urgent, 4 one 5 three three 6 7547.

Also, the newsletter has not been going out, I'm looking for a newsletter editor, sorry about the interruption.

September 13, 2005

The enterprise software market is dead, dead, dead....

By Tom Foremski for SiliconValleyWatcher

A few weeks ago I was engaged in a debate with John Gallant, Editorial Director of Network World, via our respective blogs, about my assertion that enterprise software markets have become dead boring.

I'd like to change my argument. Enterprise software markets are not dead boring. They are just dead.

Larry Ellison has killed the enterprise applications software industry. It's dead, dead, dead, dead, dead, dead. The Siebel acquisition was the final blow, the stake in the heart.

The losers include the print media, as yet another large tech advertiser disappears.

The other loser is innovation in the enterprise software industry itself. With such a small number of big companies at the top (Oracle, SAP, Microsoft, IBM) there won't be much of a bidding war for promising startups. Valuations will be "reasonable" -- and "reasonable" never fires up the blood of a venture capitalist.

VCs need promising "ten-baggers" -- the one-in-ten winners that cover the bets on the nine losers. But with IPO markets gone, and the top companies controlling valuations, there is no decent exit strategy for investors.

That means innovation won't be funded. And the big software makers won't be innovating much, as per usual.

Larry gets all the maintenance revenues, and corporate customers have to lump it.

Here comes the cavalry?

Or, can the software-as-a-service generation of software companies-- such as Salesforce.com and RightNow Technologies--lead a cavalry charge to provide enterprises with choice and Oracle with significant competition?

That remains to be seen. One question is whether those applications can be be scaled up to carry large enterprises. We'll be watching with some interest. After all, that's one of the few areas of the enterprise software industry that is still worth watching.

September 12, 2005

Email problem...

By Tom Foremski for SiliconValleyWatcher

My apologies for being so very far behind in my email correspondence. A combination of moving apartments/office and family obligations forced me to be off-line for much of a two week period and now I have close to 10,000 emails to work my way through.

And because I'm travelling to New York city this week to be a panelist at the Impact 2005 conference, it could be a while before I get through all the emails.

If you have sent me something that is urgent please give me a call on my cell (4 one 5 three three 6 seven 5 4 seven) or resend it and I will try to get to it and get back to you. Thanks!

Heading for New York City and the Impact '05 conference...

By Tom Foremski for SiliconValleyWatcher

I'm excited to be heading to New York city this week to be a panelist at the Impact Conference held at New York University.

I'll be on panel with Joe Trippi, Howard Dean's political strategist and mastermind of an extremely effective Internet campaign that showed how blogging and other media technologies can be used by politicians to great effect.

I don't think it is an exaggeration if I say that the legacy of Mr Trippi's pioneering work will be seen in every future political election campaign in the US.

A very happy Andy Plesser, the organiser of the conference, tells me that the number of senior level executives attending the conference is phenomenal. I can't wait.

BTW, registrations are still open and will be open the day of the conference (September 15) and if you mention SiliconValleyWatcher you save $100 bucks because we are a media sponsor of the event.

From Impact '05:

Join Leading Journalists, Academics and Bloggers in New York City on September 15

Blogs, video news online, mass text messaging, social networking, RSS feeds and podcasting are challenging the dominance of conventional media and influencing public attitudes and corporate reputations. This unique, one-day conference will explore these issues with leading thinkers and practitioners.

Impact '05 Confirmed Speakers:
:: Ron Alsop, Senior Writer, The Wall Street Journal
:: Len Apcar, Editor in Chief, NYTimes.com
:: Paul Argenti, Professor of Corporate Communications, Tuck School at Dartmouth
:: Cheryl Crispen, Senior Vice President, Communications and Marketing, Mortgage Bankers Association
:: Lewis D’Vorkin, Vice President, Editor-in-Chief, News and Sports, America Online, Inc.
:: Jim Finn, Vice President of Corporate Communications, IBM
:: Tom Foremski, Editor and Publisher, Silicon Valley Watcher
:: Julia Hood, Editor-in-Chief, PR Week
:: Patrick Houston, General Manager, Yahoo! Tech
:: Jim Kennedy, Vice President, Director of Strategic Planning, The Associated Press
:: Brad King, Brad King, Web Editor, Technology Review
:: Kevin Maney, Technology Columnist, USA Today
:: Ed Paisley, Managing Editor, The Deal LLC
:: Jason Pontin, Editor-in-Chief, MIT’s Technology Review
:: Shoba Purushothaman, CEO and Co-Founder, The NewsMarket
:: Ruth Sarfaty, Vice President, Corporate Communications, America Online, Inc.
:: Elizabeth Spiers, Editor-in-Chief, mediabistro.com
:: Joe Trippi, Political Strategist
:: Joan Walsh, Editor-in-Chief, Salon.com

Infineon's Media/Analyst conference. . .and hot laps with Mario

By Tom Foremski for SiliconValleyWatcher

During my recent lengthy apartment/office move, I took a break and went to the Infineon Technologies media/analyst conference in Sonoma. Infineon, a founding sponsor of this site, attracts a decent-sized crowd to this annual event.

It is held at Infineon Raceway, one of the premier automotive racetracks in the US and just 40 minutes north of San Francisco.

The media and analysts are invited to listen to a few hours of presentations, updates from Bob LeFort, president of Infineon USA, and panel discussions on current issues from Infineon and third-party experts.

It's a quick and effective way to catch up with what the largest European chipmaker is doing, and the issues and trends that affect its business strategies.

Hot Laps

And then after lunch, Infineon invites everyone to play on the racetrack in a variety of motor sports events, including the opportunity to do "hot laps" with Mario Andretti.

This means sitting next to the seven times world champion race car driver as he barrels at incredible speeds into impossible turns in a racing Porsche GT3 Cup car. Seeing this racing legend work his craft at such close range is very very impressive.

[Last year, Nathan Brookwood, Insight 64 microprocessor analyst, had an interesting experience with Mr Andretti. As they came into a turn, one of the wheels fell off, and rolled right ahead of them(!) Mr Andretti maintained complete control of the car and within a few minutes he was back on the track with all four wheels, and plenty of eager passengers waiting in line.]

Automotive chips--Silicon drivers

My regular contacts at Infineon USA are Christoph Liedke, and his boss Gerhard Zimmermann of the comms team, aided by Mansi Agarwal. I met Christoph and Gerhard several years before Infineon became a sponsor of this site, when I was covering the chip sector for the Financial Times.

To Wall Street and many others, Infineon is viewed somewhat plainly, as Europe's largest chipmaker, spun out of Siemens, the German industrial and engineering conglomerate.

It is one of the world's largest memory chip manufacturers, but this is not always a welcome accolade. That's because memory chip markets have notoriously low margins and follow a brutal business cycle marked by long bust periods and very brief boom periods.

And that is why Infineon is pushing into higher margin chip markets such as automotive chips, a market in which it dominates in Europe but lags in the US. Which is why it bought the the ten year naming rights to Infineon Raceway, formerly known as Sears Point Raceway.

Now in its third year, it has been a very good move for Infineon. The popularity of motor sports in the US has grown tremendously over the past few years. And the venue has hosted NASCAR and many other national and international racing events, helping to associate the Infineon brand with high performance automotive technologies.

Infineon's controversial CEO

Infineon came alive for me when I first interviewed its CEO, Dr Ulrich Schumacher. He was one of Germany's most prominent business leaders and on a meteoric career path -- a business wunderkind.

He was the youngest ever director at Siemens, one of Germany's largest and most respected companies; and when Siemens decided to spin-off Infineon Technologies in April 1999, Dr Schumacher presided over a very successful IPO at the height of Germany's dotcom mania.

Infineon, within Germany, represented the crown jewel of the country's tech boom and it became one of the most widely held tech stocks in Germany.

Dr Schumacher was very much in the public eye and he used that position to push for reforms in German laws that burdened German companies in global markets. And he gladly tackled the hard cultural battles within a society that doesn't tolerate mavericks very well.

What began to fascinate me about Infineon was that it was a new company emerging from a large and well established parent. And it was trying very hard to shed the old business culture and old ways of thinking prominent in the German business community.

Escaping Munich

Dr Schumacher recognized that Infineon must become a global chipmaker, not a German or European chipmaker. He would sometimes hold board meetings in different locations around the world to encourage a global perspective within the company.

I remember asking him what brought him to San Francisco one particular time. He said he had just had a company board meeting in Napa. "I have to have an excuse to get these guys out of Munich some of the time."

He also wanted to separate as much as possible from Siemens, and worked hard to reduce Siemens' stake in the company and its majority control, which he felt sometimes restrained Infineon's abilities to manage its business within very tough chip markets.

Alliances not acquisitions

Dr Schumacher pursued a very savvy business strategy, establishing numerous manufacturing partnerships with other leading chipmakers, such as IBM. This spread the capital investment risk, and it enabled Infineon to co-develop leading manufacturing processes and technologies.

And Infineon was very conservative in its acquisitions, avoiding large deals but happy to help bid up the price of acquisitions targeted by rivals.

The low margins in the memory chip business also forced Infineon to become highly disciplined and cost-efficient in its manufacturing, which it then applied to its other chip products, improving the profit margins on those lines.

Outspoken payback

Mr Schumacher trod on many toes during his tenure at Infineon. And his outspoken opinions and attempts to limit Infineon's exposure to European labor earned him the enmity of German trade unions and many others. He resigned from Infineon in March 2004 during a board meeting.

Dr Schumacher's strategy and culture still continues at Infineon. And the company maintains a strong presence in Silicon Valley with several thousand workers in San Jose and other locations in the US.

It's not just the talent pool in Silicon Valley that Infineon benefits from, but also from the the region's culture of entrepreneurship, risk taking, and innovation. I've seen such associations with Silicon Valley transform companies and they are very important, more important than we sometimes realize.

Where were you?

Infineon's sponsorship of SiliconValleyWatcher shows it is a stalwart supporter of innovative approaches, and keen to explore the opportunities emerging from the use of innovative/disruptive media technologies such as blogging. And it has been willing to experiment with the medium directly, establishing InfineonWatch.com.

But it has not been easy sailing for Christoph Liedke and Gerhard Zimmermann, who have had to step out on a limb with their support of SiliconValleyWatcher. The chip industry has slipped into yet another downturn, and they have smaller budgets and have had to face questions about their support for "blogging" type media publishers.

Obviously, I think Infineon's money is well spent and the association with SiliconValleyWatcher is helping both parties build our brands in mutually positive ways.

Plus, what excites me the most, is that we all get to be part of an amazing phenomenon that is changing the global media sector; and it will lead to some very profound and historic changes in our global society, some of which we cannot yet predict. And we will be able to say to our grandchildren: "I was there." imho.

- - - - - - - -

[Infineon is listed on the DAX 30 index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX).]

September 8, 2005

I hate nearly all my stuff...

By Tom Foremski for SiliconValleyWatcher

I had forgotten how very painful moving apartments can be. That is what I've been doing for the past 10 days or so. And it is why I haven't been blogging or checking my email.

Unwiring and rewiring my life has been my preoccupation, and I'm fed up with the whole process. If I were better organized I would have thrown most of my stuff into a truck and sent it off on a one-way journey to somewhere else. But instead, I was forced to carry my stuff up and down and across and up and down for days, as were the people who helped me.

I don't even like most of my stuff, yet I ended up with boxes of it all over my new apartment. I finally understood that saying (was it George Carlin?) that when you own stuff, your stuff owns you.

And my stuff has been tormenting me because I own it. I'd rather somebody else owned it, then I wouldn't have to keep shoving it around my apartment, it would be someplace else, it would be somebody else's stuff.

A big "thanks, mate" to Tom Abate, one of the SF Chron's finest journalists, who showed up with his truck and disposed of the worst of my stuff in a San Leandro landfill. And also thanks to Chris Dichtel, Rick Gable, Matt, Mike Faden, and the teamsters (you can't move in this town without them, they were excellent.)

And...thanks to the anonymous Netgear open WiFi network I managed to pick up (my DSL doesn't get switched on until Saturday). San Francisco used to be full of open WiFi networks. Let's bring back that neighborly practice, I leave mine open all the time...

Hot laps at Infineon

I did take a break for a couple of days during the move to visit with one of our foundation sponsors, Infineon Technologies at its annual media and analyst day, a big event for the company.

It's a two day event in Sonoma county and it includes an invitation to play in and on, the Infineon Raceway, one of the premier motorsport venues in the US. I'll be posting separate reports on the media/analyst day -- "Real men really do have fabs" and "Hot laps with Mario Andretti."

Please resend or call

My apologies, but I am many days behind in my email. Please resend if it's time-sensitive and important, otherwise I'll gradually get to it. Or better yet, call me on my cell: 4 one 5 three three 6 seven 5 4 seven) Afternoons work best.

September 1, 2005

Move in Progress --- Sorry

We are in the middle of moving (well, Tom is, anyway); and as soon as we get unpacked in the new abode, we'll be back.

Meanwhile, thanks for your patience.

Now which box is my laptop in?