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The Morning Download cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints.
Good morning, and welcome to Friday. The big news this morning is Google's boffo earnings, as WSJ reports. But to CIOs, the announced stock split is more important because it helps preserve the control exercised by co-founders Larry Page and Sergey Brin. In a letter to shareholders, Page writes the split is intended to protect Google management from "outside pressures and the temptation to sacrifice future opportunities to meet short-term demands" and maintain the company's "pioneering spirit."
This means Page, not Wall Street, will decide whether Google will continue investing in ventures like Google Apps or enterprise search, which don't pay off for Google in the short term, but may — or have — become an important part of the business technology ecosystem. It's hard to find a CIO these days who isn't testing some portion of Apps within their organization, even if it's only for email, because of the tremendous savings — and because it's a cudgel to hold over Microsoft's head.
Nasdaq CIO Anna Ewing sees her personal stock rise. Nasdaq CIO Anna Ewing saw her total compensation jump to $3.2 million in 2011 from about $2.8 million in 2010, according to company filings released Thursday. Her base salary, $500,000, remained the same, but the value of her performance-based stock awards increased to $1,120,005 from $880,001 last year, according to CIO Journal. She has fared better than some other top CIOs, who have suffered cuts in pay, as CIO Journal reported Wednesday.
Burger King's secret CIO. Kelly Maddern has been hired as chief information officer at Burger King, the fast food chain that is working to revive its brand and boost sales as it prepares to go public. Maddern, whose appointment was not publicly announced, started her new position earlier this year. She was lured away from clothing retailer Abercrombie & Fitch, writes CIO Journal's Joel Schectman.
Apple, Windows 8 tablets leave little room for ultrabooks. "Windows 8 tablets are a more interesting device" than than Ultrabooks, says Greg Fell, CIO of global manufacturer Terex. Intel, which designed the specifications, is making a big marketing push, selling the devices as just as sleek and light as MacBook Airs — only cheaper — and more business-friendly than the iPad. But CIOs don't seem to be biting. OEMs have introduced 21 different versions of them already, with more on the way. But Fell, like many CIOs we've asked, doesn't expect Ultrabooks to make a dent as far as corporate deployments go, he tells CIO Journal.
Vendors seeking to establish standards for the cloud. A new open source project funded by major cloud vendors, announced Thursday, is intended to establish standards for web-based infrastructure platforms. That will address a significant concern of CIOs about the cloud, which is their ability to move data and applications from one cloud platform to another, or from a public cloud to a private cloud, CIO Journal reports.
TECHNOLOGY NEWS
Smartphone patents: never-ending war. As competition in the more than $200 billion global smartphone industry becomes more cutthroat, Apple and others are defending seemingly run-of-the-mill features like "slide to unlock" in order to force their rivals to either find workarounds or pay licensing fees, report WSJ's Ashby Jones and Jessica Vascellaro.
U.S., China tout progress over IP. U.S. and Chinese officials touted recent progress in intellectual-property protection in China and called for continued efforts, even as U.S. and Chinese companies engage in high-profile battles over famous names such as iPad and Michael Jordan, writes WSJ's Loretta Chao.
EMC adds pre-configured data center offering of its own. In the wake of IBM's PureSystems solution-in-a-box announced Wednesday, EMC said Thursday it is selling a private cloud platform that customers can that configure according to their needs, writes Lucas Mearian at Computerworld. But contrary to IBM, EMC includes technology from multiple partners, including Cisco, Citrix, Intel and Brocade. EMC won't sell the VXPEX platform directly, but rather through its partner channel, which includes Arrow Electronics, Avnet, and Ingram Micro.
Microsoft forms subsidiary to engage with open source communities. Microsoft is spinning out a wholly owned subsidiary to bridge the gap between proprietary Microsoft technologies and non-Microsoft technologies in mixed IT environments, reports InfoWorld's Paul Krill. This could lead to improved interoperability between Microsoft products and open source applications like Hadoop, which companies are turning to for real-time analysis of enormous data sets.
SAP's Syclo deal will help SAP adapt to the mobile world. SAP's HANA database, which cuts processing time by running calculations in the same chip as the server's memory, hasn't been particularly well-suited to the mobile world–at least until now, writes CIO Insight. But its acquisition of Syclo, the mobile infrastructure company, will help SAP run its applications on mobile devices.
Customer analytics are key to Netflix's future. "The goal now is to learn individual viewing preferences so well that every recommendation is a hit with that subscriber," writes Michael Liedke of CIO Insight. He takes a look at the machine learning systems — developed by a team of 150 software engineers — that put Netflix at the forefront of data analytics.
Up in the sky, it's H-P, in the cloud. Amazon and Google get lots of attention for their cloud offerings, so the cloud services that Hewlett-Packard has brought to market may have taken rivals by surprise, writes Jennifer LeClaire of CIO Today. H-P has taken a hybrid approach, combining common architecture, traditional IT, and private and managed public clouds.
Infosys profit rises 27%. Infosys beat expectations with a 27% rise in its January-March net profit, but the company said it expects the current year's revenue growth to fall way short of industry estimates because of continued patchiness in the U.S. recovery, and anti-outsourcing rhetoric in the lead-up to the presidential election, reports WSJ.
Why the DOJ is likely to lose its antitrust suit targeting Apple. The feds have "a far better case against the publishers than Apple," says Dominick Armentano, professor emeritus of economics at the University of Hartford. Apple didn't even attend a meeting in London where publishers had a key pricing discussion. Moreover, both Apple and the publishers benefit from a series of U.S. Supreme Court precedents. "In the 1979 BMI vs. CBS case, the court ruled that 'not all arrangements among actual or potential competitors that have an impact on price are per se violations.' And in a 2007 case, the court said that manufacturers can enforce minimum retail prices, which is one aspect of what publishers are accused of doing with e-books," writes CNET's Greg Sandoval.
EVERYTHING ELSE YOU NEED TO KNOW
New warning sign from China. China's economy grew at its slowest pace in nearly three years in Q1 – GDP came in below estimates at 8.1%. Fading real-estate construction and weak demand from Europe were the main culprits, the WSJ's Tom Orlik says in this Heard on the Street. But that gave domestic consumption a chance to shine – contributing 76% of Q1 growth, up from 52% in 2011. "It's early days yet, but that's a sign China could be shifting to a more balanced—and sustainable—growth model."
Revisions hold clues to jobs. Weekly jobless claims revisions show that hiring has been a lot more tepid than the initial results suggest. The Labor Department has revised its first estimate of seasonally adjusted claims the following week in 57 of the past 58 reports, the WSJ reports. "The revisions don't change that new jobless claims have been trending down week-by-week since the middle of last year. But the figures show the improvement hasn't been as strong as the initial numbers suggested."
Best Buy probe deepens. Best Buy is looking into whether CEO Brian Dunn misused company assets during his alleged relationship with a female subordinate, the WSJ reports. Former CEO Bradbury H. Anderson said the probe had wounded morale and that he has "been in conversations with people who have been in tears." The company is also getting heat for not immediately disclosing that the board's audit committee was investigating Dunn's personal conduct.
Dow Chemical appeals R&D ruling. Dow Chemical is facing off with the IRS over which costs are eligible for the research and experimentation tax credit, CFO Magazine reports. The IRS says that if Dow wins the appeal "the limits on what qualifies as R&E costs would be 'eviscerated' and other companies might use the research credit to subsidize operations instead of to support legitimate research spending."
WHAT YOUR CEO IS READING — Every week, CIO Journal offers a glimpse into the mind of the CEO, whose view of technology is shaped by stories in management journals, general interest magazines and, of course, in-flight publications.
- 'Agreeing is easy. Disagreeing takes more guts.' Ousted Yahoo CEO Carol Bartz says if you're going to be a straight talker, you have to believe that it's a virtue. Bartz is part of Businessweek's second-annual how-to issue, featuring heaps of advice from all kinds of business leaders. Ford CEO Alan Mulally says if you want honest feedback you have to show people that it's safe for them to give it. And more importantly, you have to act on it – if you don't the feedback will stop. And legendary lawyer David Boies offers some tips on how to negotiate: Don't give false expectations and above all … be patient.
- Route to success goes through China. Principal Financial CEO Larry Zimpleman grew up on a farm in eastern Iowa and didn't get his first passport until he was 46. But as far as he's concerned, the future is in China. The Middle Kingdom is the next step in Zimpleman's grand strategy to make money off every stage of an adult's life cycle, writes Julie Segal in Institutional Investor. The strategy is humming along mostly because he's figured out that putting time and effort into local relationships pays off. One of his biggest coups was when China Construction Bank chose Principal for a mutual fund joint venture – all because Zimpleman was the only one to ask the bank what it wanted from the deal.
- Who will hold the keys to the Internet? There's a war under way for control of the Internet, writes Michael Joseph Gross in the May issue of Vanity Fair. A year-end meeting to revise a U.N. treaty governing the Internet "could split the virtual world as we know it," Gross says. Authoritarian regimes are sick of the Internet being run by a small group of tech organizations based mostly in the U.S. And the man running the conference seems to agree. Hackers are the big wild card, though. They want to make an impression at the confab by bringing down the Domain Name System itself—halting all Internet traffic completely. Their protest would be aimed at "Wallstreet, our irresponsible leaders, and the beloved bankers who are starving the world for their own selfish needs out of sheer sadistic fun."
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