H.P., Tech Powerhouse, Stumbles in Smartphones

By ASHLEE VANCE

Published: February 23, 2010

Hewlett-Packard is one of the world’s most successful makers of desktop computers, laptops, servers and printers. It owns a powerful consumer brand, and it is a growing provider of services for businesses. In the first quarter, the company’s sales rose 8 percent.

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Daniel Acker/Bloomberg News

The latest model in Hewlett-Packard's line of smartphones, the iPaq Glisten.

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A Small Player

But in smartphones, H.P. has been on a steady slide into irrelevance.

Sales of H.P.’s hand-held products, including its iPaq smartphone, dropped to $25 million in the quarter, down from $57 million in the same period last year. Apple, by contrast, had sales of $5.6 billion for iPhones and related products during its most recent quarter.

H.P.’s anemic performance in the smartphone market has left analysts perplexed. Globally, unit sales of smartphones are now running just about equal with laptops, and by 2012, smartphone sales are expected to eclipse the entire personal computer market.

The world’s largest computer maker is on the verge of missing the next great phase of the computing revolution.

“We are trying to figure out whether H.P. wants to be in the smartphone game or not,” said Kevin Restivo, an analyst with the research company IDC. “Whatever the strategy is, H.P. needs to move quickly right now, because we’re in the halcyon days of smartphone growth, and it won’t last forever.”

H.P. acquired the iPaq line of personal digital assistants in 2001 when it bought Compaq Computer. The first phone version, running Microsoft’s Windows Mobile software, appeared in early 2007, and H.P. recently released its latest model, the iPaq Glisten.

But H.P. has put little effort into the design or marketing of the devices, and the iPaq has been overshadowed by products from companies like Research In Motion, HTC and Apple that look better and cater more effectively to customers looking for both business functions and entertainment in one device.

H.P.’s stumble — a rarity under its chief executive, Mark V. Hurd — comes despite the company’s repeated insistence over the years that it wanted to be a big player in smartphones.

In 2006, for example, H.P. broke off hand-helds as a separate business unit, saying the split would help the division capitalize on the fast growth of smartphones and related devices. In addition, H.P.’s current head of hand-held products, Steve Manser, previously led product development at Palm, a pioneering smartphone maker, and the unit is part of H.P.’s personal systems group, which is headed by Todd Bradley, Palm’s former chief executive.

H.P. continues to say that it is serious about smartphones, even though sales of hand-helds have fallen about 80 percent over the last five years. “We are committed to the phone space,” said Phil McKinney, the chief technology officer in H.P.’s personal systems group, in a recent interview. However, he declined to discuss the company’s future smartphone products or plans.

Smartphones offer hardware makers a way to build more extensive relationships with customers. Apple has delivered more than three billion software applications through the store tied to its iPhone. Now, it is looking to expand sales of software and content through the iPad, a tablet computer due out next month.

Researchers at H.P. have talked for years about software and services that will let people print easily from their phones, manage their photos in new ways and communicate with each other through mobile versions of social networks.

While prototypes of such services exist, full versions have yet to make their way to H.P.’s iPaq.

Analysts say that it is not too late for H.P. to turn around its smartphone business. Despite being in the phone market for only two and a half years, Apple ended 2009 as the third-largest smartphone maker, trailing Nokia and R.I.M., the maker of the BlackBerry. While smartphone sales over all grew 15 percent last year, Apple’s surged 82 percent.

H.P. also has valuable access to retail stores through its personal computer and printer businesses. About 86 percent of Windows-based smartphones are sold through such stores.

But the longer H.P. dallies, the stiffer the competition gets. Acer, the world’s second-largest PC maker, has already made a vast commitment to the smartphone market. It bought a smartphone maker called E-Ten in 2008 and has released about 10 phones over the past year, including devices that run both Windows and Google’s Android software.

At the Mobile World Congress held in Barcelona, Spain, last week, Acer unveiled a wide variety of upgraded smartphones at a large, rented compound planted in the middle of the show grounds.

“From our point of view, it’s important to become the No. 1 seller of mobile products,” said Gianfranco Lanci, the chief executive of Acer, in an interview at the show. “Smartphones will become bigger than laptops, and it’s a huge opportunity.”

H.P.’s top PC competitors, including Dell, Lenovo and Asustek, also had new phones on display.

H.P., meanwhile, came off as a virtual nonentity at the show, which is the global cellphone industry’s biggest annual event. The company made no cellphone announcements, saying only that it would begin selling a tiny Android-based laptop that runs on a low-power ARM chip designed by Qualcomm.

Although Microsoft says that it expects H.P. to offer a smartphone later this year that uses the newest mobile version of Windows, Mr. McKinney of H.P. steered away from the subject in the recent interview.

Indeed, H.P. seems to be putting more focus on products just to the side of the smartphone category. Noting that there is already a lot of competition in the cellphone market, Mr. McKinney pointed to a slate computer that H.P. will release this year to compete head-to-head against Apple’s iPad.

“I am not going to say we are not focused on phones, but we are looking to see if there are opportunities in these new kinds of form factors,” Mr. McKinney said. H.P. is experimenting with mobile devices that have varying screen sizes, he said. “There is clearly a gap that has opened up for a device that has north of a 3.5-inch screen and less than a 9-inch screen.”

TOYOTA, alas!

TOYOTA

lex 2010-02-24

At least top US Toyota executive James Lentz was not expected to perform seppuku in front of a Congressional hearing on safety issues yesterday. He might have felt tempted though. Although corporations rarely receive sympathy when confronted by flesh and blood victims, spare a thought for a company indicted in the court of public opinion, which faces dozens of private lawsuits, an investigation by securities regulators and, most ominously, a criminal investigation.

Toyota has pledged to fix mechanical problems but continues to insist its electronic throttles are not defective, and there is still no evidence it is wrong. It has now engaged independent testers to satisfy critics. Audi, which faced a similar issue in 1986 took the same track, but it was vindicated too late to avert commercial damage.

Toyota's initially ham-fisted public relations response is largely to blame for its situation. It was late in mounting a vigorous response from the very top and chief executive Akio Toyoda's testimony today is only an exercise in damage limitation. Toyota estimates the cost of recall of 8m vehicles so far at $2bn but the impact of reputational damage and lost sales is likely far higher. The $28bn drop in Toyota's market value in the past month is a good approximation.

History may be repeating itself. Audi's woes were magnified by a 1986 report by US TV network CBS featuring a woman who accidentally killed her six-year-old son. Footage of a spontaneously accelerating Audi was staged and the woman's admission of error in a police report ignored. A report by ABC on Toyota has gained wide attention but also appears questionable. Audi's ultimate vindication was small consolation after an 80 per cent sales drop – something that must terrify Toyota chiefs snivelling before Congress.

至少，没人期待在美国国会昨日就安全问题举行的听证会上， 丰田汽车(Toyota)美国总裁詹姆斯•兰兹(James Lentz)会切腹自杀。不过他可能有过这种冲动。尽管在面对血淋淋的受害者时，企业很少会博得同情，但替一家受到公众舆论指责的公司想一想吧——它面临 数十起私人诉讼和证券监管机构的调查，最不幸的是还面临一宗刑事调查。

丰田已经承诺修理机械故障，但仍然坚持其电子油门系统不存在缺陷，而且目前还没有证据表明其说法是错误的。为了应对批评，目前丰田聘请了独立检测机构。1986年曾遭遇类似问题的奥迪(Audi)当时采取了同样的做法，但清白来得太迟，未能避免商业上的损失。

丰 田陷入目前的局面，主要责任在于公司最初愚笨的公关反应。最高管理层迟迟未能做出有力回应，首席执行官丰田章男(Akio Toyoda)今日的作证只是一种减少损害的行为。丰田估计，召回800万辆汽车迄今的成本是20亿美元，但名誉受损和销售损失带来的影响可能要高得多。 看看过去一个月丰田280亿美元的市值损失吧。

历史可能会重演。1986年，美国哥伦比亚广播公司(CBS)有关一位妇女意外令6岁儿子丧 生的报道，加剧了奥迪的困境。哥伦比亚广播公司播放了奥迪汽车自发加速的镜头，却忽略了警方报告中那名妇女承认操作失误的部分。美国广播公司(ABC)对 丰田的报道引起广泛关注，但看起来也很可疑。奥迪最终的清白证明只是一个小小的安慰，此前，该公司的销售已经下滑了80%——这必定会让在美国国会面前啜 泣的丰田高管惊慌不已。

鸿海墨西哥有人故意纵火

鸿海精密(Hon Hai Precision Industry)昨日证实，其墨西哥Juárez工厂上周发生的一起火灾，系有人故意纵火。鸿海精密是全球最大的电子代工厂商。

该集团为自己开脱，否认这起袭击是有关加班费的争执所引起的。

这家台湾公司表示，袭击时间没有影响生产计划，“纯粹是一名前员工挟怨报复”。该公司对旗下工厂的运行情况通常都会保密。

虽然鸿海在台湾家喻户晓，在全球拥有50万名员工，但在美国和欧洲，却很少有人会把它或其富士康(Foxconn)商标与其代工生产的众多产品联系起来。这些产品包括苹果(Apple)的iPods、戴尔(Dell)台式电脑和索尼(Sony)的PlayStation 3游戏机等。

鸿海许多工厂都设在劳动力价格低廉的地区，如中国南方，因此该公司对媒体有关其工厂和工人待遇的报道极为敏感。

本月早些时候，一名路透社(Reuters)记者声称，他在公路上拍摄鸿海在中国龙华的工厂时，遭到了保安殴打。

鸿海表示，2月19日清早，在Juárez，一群正在等候公司班车的夜班工人“开始不约而同地用手帕蒙住脸部”，他们大约有30人左右。

该公司称，这些人鼓动其他工人，声称公司不会因为班车晚点而支付给工人加班工资。

该公司表示，在事件过程中，一些工人在厂区活动中心点起了火。该厂雇有7000名工人。

据当地媒体报道，包括食堂在内的大片地方都受到了火灾影响，数千名工人被疏散。

鸿海表示，工人们被一名心存不满的前员工利用了，此人就是为了“实施这起精心策划的纵火事件”。

墨西哥媒体报道称，这辆班车晚点，是管理层为了迫使工人无偿加班，故意阻挠所致。鸿海表示这种说法“歪曲事实，具有误导性”。

鸿海表示，工厂经理已经明确表示，公司会支付加班工资，“只会对那名挟怨策划这起非法行为的前员工采取法律手段”。

鸿海表示：“这起不幸事件没有影响公司在墨西哥投资的信心。”

译者/杨远

Smaller schools learn to play to their strengths

Near the end of an American football game against the Indianapolis Colts in November, New England Patriots coach Bill Belichick ordered his team to run with the ball instead of kick it. His decision cost the Patriots the game.

Last night it was the Colts, not the Patriots, who played in the National Football League Super Bowl against the New Orleans Saints in Florida. The Super Bowl is the biggest sports business event of the year and virtually guarantees a $500m windfall for the local economy of the host city. Brands are willing to pay $3m for a 30-second television spot.

It is an event so commercially significant that Kellogg School of Management at Northwestern University conducts an annual advertising review. Marketing faculty and members of the Kellogg Marketing Club convened on campus last night to watch the event and to rate the advertisers using a set of strict academic criteria. This will be used to produce a ranking of the Super Bowl's most - and least - successful advertisers.


"Sports leagues and teams receive high media coverage but, aside from one or two exceptions like Manchester United [the UK soccer team], most aren't big businesses or organisations that employ a lot of people," says Stephen Greyser, marketing professor at Harvard Business School . "And many are still run as family businesses."



According to Prof Greyser, more sports teams and leagues need to apply the kind of management principles taught in business schools. At the same time, students show a voracious appetite for sports-related content. Why then do the top business schools keep sports at arm's length?



While schools such as the Lundquist College of Business at the University of Oregon and the College of Business Administration at University of Central Florida offer dedicated sports MBAs, few of the top-ranked US schools offer an MBA with any kind of sports business concentration.



At Stanford Graduate School of Business , professor of management George Foster points to the success of MBA graduates such as Wyc Grousbeck (Stanford), chief executive of basketball team Boston Celtics, and Larry Baer (Harvard), chief operating officer at the San Francisco Giants, as examples of how a general MBA serves sports best.



"Neither jumped . . . straight out of their MBA programmes into sports management," says Prof Foster. "Their non-sports years prior to their current positions gave them a tremendous platform to think clearly about the major decisions they make."



Wharton, at the University of Pennsylvania, seeks to satisfy students' curiosity with a sports-research approach, offering its professors and students the opportunity to act as consultants to sports businesses.



"We're funding 15 different sports research projects by professors who have not worked in the field of sports before," says Kenneth Shropshire, a sports lawyer who teaches negotiation technique to MBA students and runs the Wharton Sports Business Initiative. "After just two years, we're beginning to get some of those findings back, which we will publish in a Wharton sports business review."



At Harvard, the tack is to weave sports into the fabric of the MBA through case studies. "I have a colleague who has just written an interesting case study on pricing for a World Cup or Olympics event," says Prof Greyser. "Isn't the best way to expose a wider range of people to sports businesses to have material based on it present in the curriculum, rather than under a special heading?"



However, critics believe the reason for the arm's-length approach lies in the business school league tables published by magazines and newspapers - such as the Financial Times' rankings of global MBA programmes . "The problem is that sports jobs are usually low-paying and they hurt a business school's placement's stats," claims Wayne Winston, a professor of operations and decision technologies at Indiana's Kelley School of Business.



"I do think more professors will start using sports examples to illustrate analytic concepts because the students love them. Sports has great examples of how being data-driven makes it easier to succeed," says Prof Winston, who is also a consultant for the Dallas Mavericks basketball team.



Outside the US, sports management programmes are also few and far between. In the UK, Manchester Business School offers an MBA in sport and major events, while Liverpool University has a soccer-focused MBA. But even in sports-mad Australia, leading business schools such as Australia School of Business (AGSM), Macquarie Graduate School of Management and Melbourne Business School have yet to develop an MBA with a sports focus.



But among US schools less focused on rankings, there are growing opportunities for students to concentrate on sports modules once they have completed core MBA content. The School of Business at George Washington University and Georgetown University , Washington DC, are among the latest to launch sports management MBAs and masters programmes.



The MBA at Oregon's Warsaw Sports Marketing Center was one of the first and entwines sports modules around a full two-year programme.



"We recognise that we will never compete with Harvard or Wharton on a strictly MBA basis, but to exploit a niche is sound business strategy," says Paul Swangard, managing director of WSMC.

"We also have the benefit of having in our backyard a confluence of major apparel manufacturers such as Nike, Adidas and Columbia around which we can build our programme."

Although a sports MBA programme at Arizona State University last year fell victim to budget cuts, Mr Swangard maintains the model is valid.

"What you get from programmes like ours is a 24/7 focus on the sports industry," he says.

去年11月，在对阵印地安那波里斯小马队(Indianapolis Colts)的美式橄榄球赛接近尾声时，新英格兰爱国者队(New England Patriots)主教练比尔•贝里提克(Bill Belichick)命令球队带球跑动，而不是踢球。他的决定让爱国者队输掉了那场比赛。




2月7日晚，在佛罗里达全美橄榄球联盟超级碗(National Football League Super Bowl)比赛中，迎战新奥尔良圣徒队(New Orleans Saints)的正是小马队，而不是爱国者。超级碗是每年最大的体育赛事，几乎能确保主办城市的经济获得5亿美元意外收入。许多品牌都愿意支付300万美元购买30秒的电视插播广告。



这项赛事在商业上是如此重要，以至于西北大学凯洛格管理学院(Kellogg School of Management, Northwestern University)进行了一项年度广告评估。比赛当晚，营销教员与凯洛格市场营销俱乐部(Kellogg Marketing Club)的会员齐聚校园，一边观看比赛，一边用一套严格的学术标准给广告商打分。他们将用这些评分来制作一份超级碗最成功与最不成功广告商的排行榜。



“体育联盟和运动队有很高的媒体报道率，但除了（英国足球队）曼联(Manchester United)等一两个特例，大多都不是员工众多的大型企业或组织，”哈佛商学院(Harvard Business School)市场营销学教授史蒂芬•格雷瑟(Stephen Greyser)表示。“许多仍在采用家族企业运营模式。”



格雷瑟表示，有更多的运动队和联盟需要应用商学院教授的那种管理原理。与此同时，学生们对体育相关内容表现出了强烈兴趣。那么顶级商学院为何对体育敬而远之呢？



尽管俄勒冈大学Lundquist商学院(Lundquist College of Business, University of Oregon)、中佛罗里达大学工商管理学院(College of Business Administration, University of Central Florida)等院校提供针对体育的MBA项目，但很少有美国顶尖商学院提供专注于体育事业的MBA。



在斯坦福大学商学院(Stanford Graduate School of Business)，管理学教授乔治•福斯特(George Foster)以维克•格罗斯贝克（Wyc Grousbeck，斯坦福大学）、拉里•拜尔（Larry Baer，哈佛大学）等MBA毕业生的成功为例，说明了综合MBA项目为何最适合于于体育。维克是篮球队波士顿凯尔特人(Boston Celtics)的首席执行官，拉里是旧金山巨人队(San Francisco Giants)的首席运营官。



福斯特表示：“两人都不是……从MBA课程直接跳到体育管理的。他们坐到今天的位置前在非体育领域的工作经历，为他们提供了一个极好的平台，让他们能考虑清楚自己做出的重要决策。”



宾夕法尼亚大学(University of Pennsylvania)沃顿商学院(Wharton)寻求通过体育研究的方法来满足学生的好奇心，向教授与学生提供了担任体育企业顾问的机会。



向MBA学院教授谈判技巧的肯尼思•施罗普希尔(Kenneth Shropshire)也是沃顿体育产业项目(Wharton Sports Business Initiative)的负责人。他表示：“我们正在资助15个不同的体育研究项目，负责项目的教授以前都没有在体育领域工作的经历。仅仅过了两年，我们就开始收获了一些研究成果，我们将在一份沃顿体育产业论估中发表这些成果。”



哈佛的做法是，通过案例研究将体育纳入MBA课程。“我的一个同事最近刚刚撰写了一份有趣的案例研究，内容是世界杯(World Cup)或奥运会赛事的定价，”格雷瑟表示。“将相关材料纳入课程，而不是开一个特别专题，难道不是让更广泛人群了解体育企业的最好办法吗？”



不过，批评人士相信，顶尖商学院疏远体育内容的原因在于杂志与报纸发表的商学院排名——如英国《金融时报》全球MBA项目排行榜。“问题在于，体育行业的工作通常薪酬较低，会影响一家商学院的排名统计，”印第安那大学凯莱商学院(Kelley School of Business, Indiana)操作及决策技术教授韦恩•温斯顿(Wayne Winston)表示。



“我确实认为，会有更多教授开始使用体育案例来说明分析的概念，因为学生喜欢。对于从数据出发如何会让成功变得更容易，体育界有一些很棒的例子，”身为篮球队达拉斯小牛队(Dallas Mavericks)顾问的温斯顿表示。



在美国之外，体育管理项目同样很少见。在英国，曼彻斯特商学院(Manchester Business School)提供一个体育及重大赛事MBA课程；利物浦大学(Liverpool University)有一个足球方向的MBA。但即使在酷爱体育的澳大利亚，澳大利亚商学院(Australia School of Business)、麦格理管理研究所(Macquarie Graduate School of Management)、墨尔本商学院(Melbourne Business School)等领先商学院，也还没有推出体育方向的MBA。



但在一些不那么关注排名的美国商学院，学员们完成核心MBA内容后可专注于体育模块的机会正变得越来越多。最新推出体育管理MBA和研究生课程的院校包括乔治•华盛顿大学商学院(School of Business ,George Washington University)和华盛顿乔治敦大学(Georgetown University)。

俄勒冈华沙体育产业中心(Warsaw Sports Marketing Center)是首批这么做的商学院之一，它将体育模块纳入了为期两年的MBA课程中。



“我们认识到，就严格意义上的MBA来说，我们永远无法与哈佛或沃顿竞争，但发掘小众市场是一个不错的商业策略，”华沙体育产业中心董事总经理保罗•斯万加德(Paul Swangard)表示。



“另外，我们也受益于后院中有众多大型服饰制造商，例如耐克(Nike)、阿迪达斯(Adidas)和哥伦比亚(Columbia)等，我们可以围绕它们制定我们的课程。”



尽管亚利桑那州立大学(Arizona State University)的一个体育MBA课程去年成了削减预算的受害者，但斯万加德仍然认为这种模式是有效的。



他说：“你从我们这类课程中得到的是对体育产业全天候的关注。”



译者/董琴

Steve Jobs

月27日﹐舊金山芳草地藝術中心(Yerba Buena Center for the Arts)﹐蘋果公司(Apple)舉行了一場人盡皆知的產品發佈會﹐玩家和媒體都認為這次揭密的產品將會為我們獲得信息、拯救紙媒行業、緩解世界飢餓等 等的方式帶來一場革命。這款產品就是iPad。人們像球迷為超級碗(Super Bowl﹐譯者注：美國橄欖球聯盟年度冠軍賽)倒計時一樣期待蘋果的發佈會﹐事先也都押下了賭注。蘋果CEO喬布斯(Steve Jobs)通過他的颱風和戲劇天賦﹐把實質上的企業新聞發佈會變成了一場文藝活動。他就像是《綠野仙蹤》里的魔法師在互聯網時代的復活。

喬 布斯是怎樣做到的？本欄目請加洛(Carmine Gallo)來分析喬布斯的技巧﹐並講解一般企業可以怎樣使用這些技巧。加洛著有《喬布斯演講的秘密：怎樣贏得所有聽眾》(The Presentation Secrets of Steve Jobs: How to Be Insanely Great in Front of Any Audience")一書﹐由麥格勞-希爾出版公司 (McGraw-Hill) 出版。他將喬布斯的魔法分解成三個要點：

法 則1：為自己的產品、服務或概念擬一條廣告語。加洛說：蘋果總會為其產品擬出一條一句話的描述﹐我把這種描述稱為一種“Twitter友好型”的廣告語﹐ 因為它總是在140個字符以下。舉例：2008年蘋果推出MacBook Air的時候﹐他列出了一句廣告語“The world’s thinnest notebook”（字面翻譯：世界上最薄的筆記本）。加洛說：這句話深刻地印在你腦海里﹐它不是普通的能被人記住的廣告語﹐而是一種實際的描述﹔如果你 不能清晰、準確地描述自己的產品是什麼﹐那就回去重新想想產品設計吧。

法則2：列出對手。加洛說：每一部好小說都有一個英雄和一個壞蛋。 舉例：喬布斯在向世界展示iPhone手機之前﹐用了數分鐘的時間概述智能手機市場﹐指出競爭對手的不足。蘋果頗受歡迎的“Mac男 PK PC男”的廣告也是這樣﹐樹立起一個想象中的更弱的對手﹐證明蘋果更強。加洛說﹐有時候﹐壞蛋就是一種需要解決的問題。

法則3：將視覺簡 化。加洛說﹐喬布斯的PPT上從來不會一條一條地列舉﹐這太平庸了﹐人人都這樣做。加洛說﹐不要依靠詞語﹐要利用圖片、影像。想想喬布斯是怎樣講解 iPhone觸摸屏的：他用了一張手指放在觸摸屏上的圖片。為說明MacBook Air的輕薄﹐喬布斯也是用了一張圖片﹐顯示的是一台筆記本電腦從辦公用信封中滑出。加洛說﹐這就是視覺上的化繁為簡。

Google Ultrafast Broadband May Shake Up Fiber Market

• FEBRUARY 10, 2010, 11:25 P.M. ET

Google Jolts Telecom Rivals

Plan to Offer Fast Web Service Is Bid to Shape U.S. Broadband Policy; Foes are Skeptical

By JESSICA E. VASCELLARO And AMY SCHATZ

European Pressphoto Agency

The Google logo on display at the unveiling of the Nexus One Android smart phone in January.

Google Inc., putting more pressure on cable and phone companies, said it plans to begin offering ultrafast Internet services to consumers in a small number of U.S. cities.

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“ The beauty of this would be that since Google has championed the cause for net neutrality, we'll be able to get as much as we want or as little as we want for the same price. ”

—Bruce Hanson

Under the plan, the Internet search giant will take its biggest step into supplying Web connections rather than the services that run atop them. Google said it will build and test a few fiber-optic networks that reach homes, aiming to serve 50,000 to 500,000 people. Google executives said the move was designed to accelerate the deployment of faster networks and show off the sort of services that high-speed connections can enable, such as rapid video downloads.

The move carries risks for Google. The company has only dabbled in telecom services so far, and isn't offering the kind of national network that could compete with industry giants. Privately, executives at cable and phone providers expressed skepticism, with one describing the plan as a publicity stunt, since Google didn't announce serious capital spending for the project.

Google's move appears to be as much about politics as about technology. It comes as federal regulators are close to completing a yearlong effort to draft a national broadband plan, which will lay out proposals to ensure all Americans have access to Internet service that is affordable and offers high speed. Google has been campaigning to spur faster service, which would enable consumers to more smoothly use Google services such as the YouTube video site.

"We have been advocating that the [Federal Communications Commission] set up an experimental testbed, and this is our way of putting our money where our mouth is," said Google product manager Minnie Ingersoll. Google said it would select the test locations this year and its service would be offered at "a competitive price."

Google and Internet providers have been facing off over a number of issues in Washington, from the availability of spectrum for wireless access to "net-neutrality," the issue of whether operators should be allowed to charge different content providers different rates for delivering that content.

News Hub: Google's Super-Duper Fast Internet Plan

1:39

WSJ's Jessica Vascellera details Google's plans for rolling out ultra-fast Internet access in some cities across the U.S. She talks with Simon Constable in the News Hub.

Ms. Ingersoll said the project was "in line" with the company's views on open access, since Google would let other providers resell service on its network and wouldn't discriminate between different sorts of traffic carried by it. Phone and cable companies aren't required to allow rivals access to their Internet lines, which critics say has hampered competition.

FCC Chairman Julius Genachowski released a statement calling Google's plan "a significant trial," while public-interest groups applauded the move as a major step toward their goal of seeing all Internet lines as open as Google says its fiber network will be.

Google said it has no intention to build a nationwide network to rival those offered by giants such as Comcast Corp. and Verizon Communications Inc. but the move could make Google investors nervous given the possible size of its expense. Google said it was too early to estimate the cost of the program, since the cities hadn't been chosen. Google could face embarrassment if the program doesn't roll out as planned and heat over possible service glitches. It could also further galvanize telecoms against it as it is seeking their cooperation on a number of projects, such as selling phones running its Android software.

The move is Google's latest attempt to pressure Internet providers to upgrade and open up their networks. Impatient with wireless carriers' control over services on cellphones, Google bid to purchase wireless spectrum, invested in wireless carrier Clearwire Corp., and bought a company that allows users to make Internet calls over mobile phones. Now, it is making a similar move in the wired Internet word, facing off against cable and phone providers—which have faced public criticism for not upgrading their networks fast enough.

Whether Google can succeed with its ultrafast network remains unclear. It has virtually no experience in the area, besides operating a relatively small Wi-Fi network in Mountain View, Calif., that has about 20,000 active users, according to the company. It had participated with Earthlink Inc. in an effort to provide free wireless access to San Francisco, which was abandoned amid political opposition and financing concerns.

Art Brodsky, communications director of Public Knowledge, a public-interest group in Washington, said that even if Google comes up with something "whiz-bang" it is unclear whether large service providers would upgrade their networks faster. The group has received funding from Google, as well as other Internet providers, including Comcast.

A cable industry official noted Google has no background in the difficulties of sending trucks and technicians out to people's homes to provide customer service and sending customers a bill every month. "If this were easy, everybody would be doing it," this person said.

Google said in a statement it knows "that other companies have been in this business a long time, and we're not pretending to have all the answers here." It added, "We do have experience with Web infrastructure from operating our data centers."

Ms. Ingersoll said Google will manage the deployment of the fiber network, but probably partner with contractors to help build it. Google said it would offer service at a speed of one gigabit per second—100 times faster than what many U.S. consumers have access to today.

The National Cable & Telecommunications Association, which represents cable operators, noted in a statement that cable operators have invested $161 billion over the past 13 years in Internet lines, and said that they "look forward to learning more about Google's broadband experiment."

—Nat Worden and Roger Cheng contributed to this article.

Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com and Amy Schatz at Amy.Schatz@wsj.com

Google Ultrafast Broadband May Shake Up Fiber Market

Brad Reed, Network World

Feb 11, 2010 10:00 am

Not content to merely challenge Internet carriers in the mobile phone world, Google is now challenging them in the fiber world as well.

Google Wednesday announced on its blog that is constructing an experimental fiber network that the company says will "deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections."

10 great Google Apps add-ons for the enterprise

Google says the network will have three main goals: to foster the development of next-generation applications, to explore new ways of deploying fiber networks and to provide a model for an open access network governed by network neutrality rules. Google says that it will offer access to the network in "a small number of trial locations" and that it will serve from 50,000 to 500,000 people.

Google's fiber network proposal is somewhat similar to its decision in 2007 to launch its own mobile operating system, in that both initiatives reflect Google's willingness to use its clout to change how carriers operate. When Google unveiled the Android platform to the rest of the world, it was the company's way of pushing the mobile phone industry toward more openness and of fostering great application development. Because Android is an open source platform, it can be adopted by device manufacturers for free and can provide a no-cost platform for application development.

Similarly, Google's decision to release its own Nexus One smartphone was its way of trying to divorce mobile devices from specific carriers. So if AT&T were to begin offering the Nexus One, for instance, users could switch from their T-Mobile accounts to an AT&T account without purchasing a new device. Google hopes that this will lead to more carrier-agnostic devices in the future that will allow users to switch carriers without ditching their favorite mobile phones.

And now, with the construction of its experimental fiber network, Google is trying to push its vision for how the Internet as a whole should operate. With typical broadband speeds lagging behind those in countries such as South Korea and Japan, Google is seemingly trying to give U.S. carriers a kick in the pants by saying, "If we can build a network this fast that serves large numbers of people, so can you."

And what's more, the Google network will be open access, meaning third-party service providers will be able to use it to deliver Internet to their customers. In this way, Google is trying to bring back discarded open-access rules that used to require incumbent telecom companies such as Verizon and AT&T to allow ISPs such as Earthlink to buy space on their DSL broadband networks at discount prices. Before the Federal Communications Commission tossed out these open-access rules in 2005, incumbent carriers would typically wholesale access to their networks to other ISPs that would compete with each other to sell Internet services to consumers and businesses.

But while Google may intend for its network to serve as a model for other carriers, there is no guarantee that it will lead the incumbent carriers to follow suit. After all, the success of the open source Android operating system hasn't made proprietary operating systems such as the iPhone OS or BlackBerry any less popular or profitable. What remains to be seen, then, will be whether the Google network will lead to a revolution or will remain just a pretty model.

Read more about lans and wans in Network World's LANs & WANs section.

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The Supply Chain Is Flat

William Fung, the head of an old and very large Hong Kong trading company, on making and selling products in a vastly altered global landscape.

by Sheridan Prasso

You’d think that in a recession, the middleman would be the first to go. It turns out that’s not quite true — at least, not if the middleman is so efficient and streamlined that it delivers more than enough savings to earn its keep. As an illustration, consider Li & Fung Ltd., 利豐 a century-old Hong Kong–based sourcing company. Since the downturn began, Li & Fung — which manages a 40-economy sourcing network covering clothing, home furnishings, household products, sporting goods, and more — has attracted more than its share of new customers. Such brand names as Liz Claiborne and Talbots have joined Tommy Hilfiger in choosing to eliminate their in-house procurement programs and instead trust Li & Fung’s expertise in supply chain management.

William Fung, Li & Fung’s managing director, calls his company’s recent record “flat-world success”: the old-fashioned infrastructure is gone, replaced by fluid networks that can design, manufacture, and distribute almost anything, anywhere, and on any timetable. That strategy has transformed a company that began life in 1906 as a trading outfit for Chinese silks, porcelain, and tea in Canton (now Guangzhou) into a US$14 billion organization, the focus of seven Harvard Business School case studies. Fung and his brother, Victor (who is chairman of Li & Fung), coauthored Competing in a Flat World: Building Enterprises for a Borderless World (Wharton School Publishing, 2007). Recently, William Fung discussed with strategy+business his ideas about new rules of supply chain management and the impact on global sourcing of Chinese factories, consumers, and currency policies.

S+B: How radically is the nature of global supply chains changing?
FUNG: Supply chains don’t stand still anymore, the way they used to. You could say it all began in Hong Kong after World War II. A million refugees from China provided the labor to make garments, shoes, wigs, plastic goods, toys, things like that, and ship them around the world. But after two or three decades, Hong Kong priced itself out of the market. Labor costs got too high; the standard of living kept rising. So there was a migration of manufacturing to Taiwan. I remember in 1972 setting up our Taiwan operation, and after six months my staff said, “Mr. Fung, we don’t know why you came to Taiwan, because we’re finished here. Everything’s gone to Korea.”

So we set up in Korea. And pretty soon the Thais, the Indonesians, the Filipinos were all getting into this game. Production wasn’t just jumping from market to market. There was a much more subtle process than that, more like an amoeba. Labor was cheaper in Taiwan, so the Hong Kong factories decided to send their sewing there, while Hong Kong still manufactured and shipped the final products. What we had to do as a trading company then was to secure the fabric and the yarn in Hong Kong and ship it to Taiwan. Soon we were also getting fabric from Japan and the U.S., such as denim, and sending it to Taiwan as well. We were building a system of dispersed manufacturing in which different parts were being produced in different places. That’s the norm now, but it was very new in those days — and that system needed fairly complex supply chains.

And the supply chain continues to become more mobile all the time. Today, a supply chain that produces an item in November may look completely different from one that produces it four months later. Price and speed and raw materials all have an impact. The cheapest way I know to produce a men’s shirt now is to get fabric from certain parts of China, ship it to Bangladesh, and make the shirt there; it may be ready for the fall season. But if that style really started to sell well and you wanted to reorder in January for February or March delivery, I would take the same fabric and make it in Shanghai, more expensively but more quickly and reliably.

S+B: And as supply chains change, so do the tactical models of manufacturers?
FUNG: Absolutely. Companies are moving to much more flexible manufacturing systems. John Hagel, of the Wharton School at the University of Pennsylvania, talks about companies orchestrating networks of supplies and suppliers rather than controlling everything themselves. For labor-intensive types of consumer goods, you may have to go thousands of miles away from the home base to source in countries like Bangladesh and India and China. You can offshore your operation, but how well can you manufacture in those places compared to a local guy who knows the ins and outs? Because of the distance and the difficulty of the management challenges, you’re always the most expensive manufacturer in that country. So you’re probably going to go from offshoring to outsourcing before long.

S+B: How does this network of suppliers affect trade data, such as the enormous U.S. trade deficit with China?
FUNG: The existing measurements of trade are very much antiquated. When the president of the United States says, “We’re running a trade deficit with China,” he’s working off an erroneous base for measurement. The way we determine a product’s country of origin is based on something called “major transformation,” rather than value-added processes. If the major transformation is final assembly, and that occurs in China, the product will be said to be made in China and exported back to the U.S. — even if most of the value of that product is actually manufactured in the United States. In other words, under that system of measurement, the country that gets credit for making the item may not be the one that gets the majority of the economic benefits.

For example, look at a laptop today. Chances are that the monitor is made in Taiwan, the memory is from some plant in Penang, the assembly might be in China, but “Intel Inside” is the most expensive component. Because it’s assembled in China, they slap “Made in China” on it, and it becomes part of the U.S. trade deficit with China.

S+B: How does the vast Chinese consumer market affect global sourcing and manufacturing?
FUNG: The Chinese consumer is someone the world is suddenly paying attention to. The sheer size of the market, 1.3 billion people getting middle-class status, is going to transform the world eventually. But not yet. You’re currently talking about $10 trillion in consumption for the U.S. market and $1 trillion in China — it’s one-tenth. The world has to rely on getting out of recession by having American consumers start spending again.

In China, there has always been a dichotomy between the industry that supplies the domestic markets and the industry that supplies exports, world-class products. If you were setting up a world-class factory in China, for example, you could set it up tax-free, but you couldn’t do so if it were for domestic products. Also, the export sector has been whipped into shape by companies like ours and customers around the world who demand compliance with rules or standards involving technology, speed of response, quality, health and safety, the environment, and other issues. The domestic side is not faced with the same compliance issues. So the hundreds of thousands of factories supplying the domestic market are generally of lower quality.

The big thing in China that will provide its next growth is to satisfy the local consumer by merging these two sectors. There’s resistance to this. A lot of the suppliers for the domestic market don’t want other companies to compete with them, and a lot of these domestic suppliers are owned by local governments. Eventually, though, the central government will encourage the merger of these sectors; that will create a lot of economic activity and will eliminate some of the weak players. When that happens, the domestic market in China will be supplied not only by Chinese companies but also by many more goods made around the world. Chinese consumers are like any other consumers; they just want the best product their money can buy, whether it’s from India or China or anyplace else.

S+B: Is China’s low renminbi–dollar exchange rate affecting its competitiveness?
FUNG: Everyone thinks China is such a juggernaut, but it has a serious weakness, one that reminds me of Japan in the 1970s and ’80s: a lot of production capacity, but no raw materials. China has some cotton but is still importing a lot from Pakistan and the United States. It has almost no wood. All the metals are imported. The only energy source China has in abundance is coal, which is highly polluting. China is very vulnerable, because it is subject to worldwide fluctuations in the prices of raw materials.

When the RMB [renminbi] appreciated [in 2005–07], China fell into a fairly uncompetitive situation. Now, China believes that it can be competitive if its industrial base, especially for exported goods, moves away from the high-cost coastal regions and into the interior. Until that happens, China is unlikely to let the renminbi appreciate, because doing so would put the country in a position of being vulnerable to changes in materials prices.

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• Sheridan Prasso is a contributing editor at Fortune magazine and an adjunct professor of international affairs at Columbia University.

Steve Jobs and the iPad of hope

Steve Jobs and the iPad of hope

By ECONOMIST.COM
From The Economist
Published: February 02, 2010

"HEROES and heroics" is one of the central themes of the current season at the Yerba Buena Centre for the Arts in San Francisco, which prides itself on showcasing contemporary artists who challenge conventional ways of doing things. On Wednesday January 27th the centre played host to one of the heroes of the computing industry: Steve Jobs, the boss of Apple, who launched the company's latest creation, the iPad. Mr Jobs also has a record of showcasing the unconventional. He did not disappoint.

The iPad, which looks like an oversized Apple iPhone and boasts a ten-inch (25cm) colour screen, promises to change the landscape of the computing world. It is just half an inch thick and weighs 1.5 pounds (680 grams). "It's so much more intimate than a laptop, and it's so much more capable than a smartphone," Mr Jobs said of the device, which will be available in late March. With a host of other touchscreen "tablet" computers that are expected to reach shops over the next year or so, it could also revolutionise the way in which digital media are consumed in homes, schools and offices. The flood of devices is likely to have a profound impact on parts of the media business that are already being turned upside-down by the internet.

The move from print to digital has not been easy for newspaper or magazine publishers. Readers have proved reluctant to pay for content on the web. Companies are unwilling to pay as much for online advertisements as paper ones—hardly surprising, given the amount of space on offer. The iPad will probably accelerate the shift away from printed matter towards digital content, which could worsen the industry's pain in the short term. Yet publishers hope that tablets will turn out to be the 21st-century equivalent of the printed page, offering them compelling new ways to present their content and to charge for it. "This is really a chance for publishers to seize on a second life," says Phil Asmundson of Deloitte, a consultancy.

It does not come as a surprise, then, that Apple has already attracted some blue-chip media brands to the iPad's platform. During his presentation Mr Jobs revealed that the company had struck deals with leading publishers, such as Penguin and Simon & Schuster. They will provide books for the iPad, to be found and paid for in Apple's new iBooks online store. The iPad will carry electronic versions of newspapers such as the New York Times, which presented an application at the launch. More agreements ought to be signed before the first iPads are shipped in March.

Apple's media partners no doubt have mixed feelings about dealing with Mr Jobs. Apple is now widely demonised in the music business for dominating the digital downloading business with its iTunes store. The firm has been able to control the price of music, boosting sales of iPods but not bringing the record companies a great deal of money. That said, Apple did provide a way for the music business to make a profit online, which had hitherto eluded it. Apple's sleek iPhone has also given plenty of content producers a platform on which they can charge for their wares.

The firm's record suggests that it will be able to make one of the computing industry's most fervent wishes come true. Technology companies have repeatedly tried to make a success of tablets or similar devices. But the zone between laptops and mobile phones has been something of a Bermuda Triangle for device-makers, points out Roger Kay of Endpoint Technologies, a consultancy. "Products launched in there have usually disappeared from the radar screen," he says.

Among them are previous generations of tablet-style computers. In the 1990s various companies experimented with the machines, including Apple. When its Newton personal digital assistant failed to take off, Mr Jobs killed the project. Tablets were once again briefly in the limelight when Microsoft's Bill Gates predicted they would soon become people's primary computing device—powered, of course, by his company's software. That did not come to pass because consumers were put off by tablets' high prices, clunky user interfaces and limited capabilities. Instead the devices, which cost almost as much as proper PCs, have remained a niche product used primarily in industries such as health care and construction.

Why are tablets causing so much excitement now? One reason is that innovations in display, battery and microprocessing technologies have slashed their cost. Apple's iPad is priced at between $499 for the basic version and $829 for one with lots of memory and a wireless connection, bringing it within the reach of ordinary consumers. Another reason for optimism is that interfaces have greatly improved. The iPad boasts a big virtual keyboard, which pops up when needed. It also features multi-touch, meaning for instance that two fingers can be used to change the size of a photo. Furthermore, tablets will benefit from the fact that people have become used to buying and consuming content in digital form.

All this explains why other firms are eyeing the tablet market too. Dozens of prototypes were on show at a consumer-electronics trade fair in Las Vegas earlier this month, including ones from Motorola, Lenovo and Dell. Jen-Hsun Huang, the chief executive of NVIDIA, a maker of graphics chips, reckons this is the first time he has seen telecoms firms, computer-makers and consumer-electronics companies all equally keen to produce the same product. "The tablet is the first truly convergent electronic device," he says.

That is why the iPad and other tablets could shake up the computing scene. There has been some speculation that they could dent sales of low-end PCs, including Apple's MacBook. But a more likely scenario is that they eat into sales of netbooks, which are essentially cheap mini-laptops used mainly for web surfing and watching videos. The netbook market has been on a roll recently, with global sales rising by 72% to $11.4 billion last year according to DisplaySearch, a market research company. That makes it a tempting target.

The iPad also poses a threat to dedicated e-readers such as Amazon's Kindle, though these will probably remain popular with the most voracious bookworms. Apple's long-expected entry into the tablet market has already forced e-reader firms to consider making their devices more versatile and exciting. "You will see more readers using colour and video over the next five years," predicts Richard Archuleta of Plastic Logic, which produces the Que proReader. And more makers of e-reader may mimic Amazon's recent decision to let third-party developers create software for its line of Kindles.

The gospel of Steve

Book publishers are quietly hoping that Apple's entry into e-books will help to reduce the clout of Amazon: the Kindle has a 60% share of the e-reader market, according to Forrester, a research firm. They are also excited by the opportunities that tablets offer to combine various media. Bradley Inman, the boss of Vook, a firm that mixes texts with video and links to people's social networks, believes the iPad will trigger an outpouring of creativity. "Its impact will be the equivalent of adding sound to movies or colour to TV," he says.

Newspaper and magazine publishers are also thrilled by tablets' potential. Their big hope is that the devices will allow them to generate revenues both from readers and advertisers. People have proven willing to pay for long-form journalism on e-readers. But these devices do not allow publishers to present their content in creative ways and most cannot carry advertisements. Skiff, a start-up spun out of Hearst, is a rare exception to this rule. Its 11.5-inch reader is large enough to show off all elements of a magazine's design and accommodates advertising too.

Apple's arrival in the tablet market also means that publishers will have to develop digital content for these devices, as well as for e-readers and smart-phones. Many will prove unable or unwilling to do so. That may boost firms such as Zinio, which has developed a digital-publishing model called Unity. This takes publications' content, repurposes it for different gadgets and stores it in "the cloud", the term used to describe giant pools of shared data-processing capacity. Users pay once for the content and can access it on various Zinio-enabled devices, increasing the chances that it will be consumed.

It makes money too

Apple has other ambitions for the iPad. It hopes it will become a popular gaming machine and has designed the device so that many of the games among the 140,000 apps available for other Apple products will run on it straight away. The company has also revamped its iWork suite of word-processing, spreadsheet and presentation software for the iPad in an effort to ensure that the new device will catch on with business folk.

Apple's shareholders are also hoping that the iPad will live up to its billing as a seminal device in the history of computing. They have seen the company's share price soar. Defying the recession, on January 25th Apple announced the best quarterly results in its 34-year history with revenues rising to $15.7 billion and profits to $3.4 billion—an increase of 32% and 49% respectively over the previous year. They will be keeping their fingers crossed that the iPad turns into another billon-dollar hit rather than a flop like Apple TV. Whether or not that turns out to be the case, Mr Jobs has already proven heroic enough to merit a portrait on the Yerba Buena Center's walls.