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Archive for July, 2011

Xoom price cut; Verizon tops, AT&T last in customer service; more

Friday, July 29th, 2011

xoom

Motorolla's Xoom

Xoom, Motorola’s tablet entry, hit the market at $800 but didn’t move the retail dial much. The company slashed the price to $500 – which makes it more competitive with the iPad – earlier this month. Now, however, the company warns that the price cut may also slash its Q3 profits.

CEO Sanjay Jha admitted he had misjudged price points for tablets, but says the company will introduce five new devices, including two new high speed tablets capable of using high speed LTE technology. And, he says, “We now recognize where the price points are.”

We tested a Xoom and found it less than an ideal tool for the types of things we need from a mobile device, such as taking photos (too heavy for comfortable use as a camera and it was tough to see the screen outdoors), or typing. We don’t care much for virtual keypads. It, like Apple’s iPad, weighs about 1.6 pounds, and it does have features the iPad does not.

It plays Flash video, which is nearly ubiquitous on the web, and it did perform tasks quickly, connected to Wi-Fi easily and shows color books to good advantage.

We suspect, however, that much of the iPad’s success is due to the Apple prestige factor and dedicated Apple fans, so we’re not sure cutting the price on the Xoom will help it much. It will be interesting to see how the company’s next batch of tablets and devices perform in the marketplace.

HTC hits record profits

One device we tested that we did like was the Windows Phone 7 Arrive from HTC with a handy slide-out keypad to supplement the virtual one on screen, easy to use, intuitive photo controls, quick and easy connections, and the operating system we like best so far on smartphones (we haven’t tested an iPhone, but used several Android devices).

We’re not the only ones who like HTC products. The company reported record Q2 profits,selling 12.1 million units and racking up a 123.7 percent year-over-year growth rate.

A lot of that growth came from China, the top market for the Taiwan-based firm.

The company faces trouble over its patent dispute with rival Apple, though. An International Trade Commission recently ruled in Apple’s favor in its request to have the ITC impose an import (to the U.S.) ban on HTC products. That could throw some legal static into HTC’s continuing success going forward.

Verizon edges out T-Mobile for best customer service, AT&T last

Verizon won the J.D. Power and Associates award for the best customer service in the industry, edging out T-Mobile by on six points of a 1,000.

Verizon scored well for the way it handles calls, while T-Mobile stood out for its online options.

Neither Sprint nor AT&T managed to score the industry average of 762 in their “Power Circle” ranks. Sprint only hit 752, leading last place AT&T by only a point.

Apple has more cash than the U.S. Treasury

The Washington Post’s Matt Hartley says Apple Inc., which reported it has $76.156 billion in cash on hand in its latest earnings report, has more money than the U.S. Treasury (which has an operating balance of $73.768 million).

Other reports say many American Corporations are flush with cash, yet most remains skittish about hiring. Seems to us that no one is going to keep making money if not enough working people are making money.

When do most smartphone users access apps? When do they engage with mobile ads?

Friday, July 29th, 2011

MobclixPALO ALTO, CA – When do most smartphone users spend time on mobile apps? Both those using Apple phones and those using Android devices spend the majority of their time using apps in the late afternoon or late evening. But, they are most engaged with mobile ads in the morning. So says a report from Mobclix, a VElti company that provides a real-time bidding mobile ad exchange.

Pulling data from its exchange, Mobclix says it found:

    • iOS and Android users across devices spend the majority of time on apps during late afternoon (4-6 p.m.) and evening (9-11 p.m.).
    • Regardless of platform, app users are more engaged with ads in the morning between the hours of 8-11 a.m.
    • App usage is highest during the weekends, accounting for 38 percent of overall time spent.
    • During the 4th of July weekend, app usage increased by 108 percent with utility apps being the most popular.
    • The Android platform holds the highest market share in the U.S., the U.K. and Japan.
    • 82 percent of the top 100 free apps use iAd as one of their ad networks.
  • Data derived from 120MM unique users seen across 10.5 billion impressions on the Mobclix exchange during the month of June. Exchange reach is calculated from the number of unique devices across the entire Mobclix exchange. Third party SDK data derived from analysis of the top 100 free apps on the iPhone app store as of June 30, 2011.

“App and ad engagement across platforms continues to escalate as the range and capability of apps grows,” said Krishna Subramanian, co-founder of Mobclix. “While Apple’s iOS and Google’s Android platforms both remain the front runners for ad impressions, Android is coming out ahead with it commanding the lead in 3 of the 5 countries we looked at in this study. While traditionally advertisers have placed a lot of focus on iOS these results demonstrate that Android has a compelling offering that is actively engaging users.”

Mobile phone market grew 11.3 percent in Q2 2011, shift to smartphones evident

Friday, July 29th, 2011

IdcFRAMINGHAM, MA – The worldwide mobile phone market grew 11.3 percent year over year in the second quarter of 2011 (2Q11), despite a weaker feature phone market, which declined for the first time since 3Q09.

According to the International Data Corporation (IDCWorldwide Mobile Phone Tracker, vendors shipped 365.4 million units in 2Q11 compared to 328.4 million units in the second quarter of 2010. The 11.3 percent growth was lower than IDC’s forecast of 13.3 percent for the quarter and was also below the 16.8 percent growth in 1Q11.

The feature phone market shrank 4 percent in 2Q11 when compared to 2Q10. The decline in shipments was most prominent in economically mature regions, such as the United States, Japan, and Western Europe, as users rapidly transition to smartphones. This was the first decline since Q3 2009 and reflected a combination of conservative spending and continued shift to smartphones.

“The shrinking feature phone market is having the greatest impact on some of the world’s largest suppliers of mobile phones,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker. “Stalwarts such as Nokia are losing share in the feature phone category to low-cost suppliers such as Micromax, TCL-Alcatel, and Huawei.”

“For the overall market to grow by double digits year over year, despite the decline in feature phones, is testament to the strength of the global smartphone market,” noted Ramon Llamas, senior research analyst with IDC’s Mobile Phone Technology and Trends team. “While this is not a new trend – smartphones have been the primary engine of growth for the last several quarters – it does mark something of a transition point, as demonstrated by the growing number and variety of smartphones featured in the vendors’ portfolios.”

Market Outlook

The feature phone forecast isn’t expected to be any rosier in the quarters and years to come. Shipment growth of the device type won’t exceed 1.1% in any year forecasted by IDC.

Regional Analysis

  • The traditionally slow second quarter in Asia/Pacific was exacerbated by Nokia’s channel inventory corrections in China. Apple thrived in China thanks to strong iPhone 4 demand. As well, a number of domestic brands in Southeast Asia like CSL, Nexian, Q-Mobile, and Wellcom grew sales of Android-powered smartphones. China-based vendors gained share in India and Southeast Asia at the low end. In Japan, the impact of the earthquake continued into April and May as component shortages forced manufacturers to release new models in June while customer demand was harder to fulfill.
  • In Western Europe, the market declined sequentially compared to the first quarter. The feature phone market declined while smartphone shipment growth slowed as phone makers and carriers reduced inventories in advance of expected third-quarter product launches. Feature phone dependent suppliers were not able to offset feature phone weakness completely with higher smartphone sales. The CEMA markets performed well on a year-over-year basis despite civil unrest in Egypt and other Arab countries, where sales were negatively impacted as a result. Samsung gained share while Chinese brands continued to make inroads in the region.
  • In North America, smartphones once again took center stage, propelled by lower prices, key device launches, and enhanced channel marketing. In particular, Android-based devices extended their lead in the United States and took leadership in Canada thanks to Samsung, Motorola, HTC, and LG. Meanwhile, demand for feature phones continued to slide, but there still existed pockets of interest for voice-centric and quick-messaging devices. Still, as the region heads towards a smartphone-centric future, IDC expects feature phones to represent an increasingly smaller portion of the market.
  • The Latin America market growth was driven by low-cost smartphones, specifically those with social networking features. Lower smartphone prices, including those of the Android variety, are driving smartphone penetration in several Latin American countries. Price is expected to be a point of differentiation – as well as applications and device features – between Android players in future.

Top Five Mobile Phone Vendors

Nokia’s hold on the top global mobile phone spot weakened last quarter as inventory buildups in traditional strongholds, namely China and Europe, led to sharp year-over-year shipment declines. Nokia’s global feature phone and smartphone businesses suffered a similar fate. One positive sign for Nokia last quarter were dual-SIM devices; the company shipped over 2.6 million of these in the second quarter. Over the long term, Nokia’s smartphone fortunes will be dictated by its ability to sell Windows Phone 7 smartphone devices, which are expected to hit the market this year. It is Nokia’s primary smartphone platform of the future. In the meantime, Nokia is trying to sustain shipment volume with low-cost mobile phones and devices powered by the aging Symbian smartphone platform.

Samsung posted double-digit growth from the same quarter a year ago, and just slightly slower than the overall pace of the market. Like other vendors it realized a decrease in demand for its feature phones, but made up the difference with continued success for its Android-based Galaxy smartphones. The difference between Samsung and market leader Nokia continued to shrink, with less than 20 million units separating the two vendors, mostly resulting from Nokia’s struggles in the market. Still, Samsung expects continued growth into the second half, which could put it in closer contention with Nokia.

LG Electronics held on to its number three position during the quarter, thanks in part to its Optimus smartphone sales worldwide. However, a combination of factors – including soft demand for its feature phones, slow pace of smartphone releases, and competitive pressures, led the company to downgrade its outlook for the year by 24%. Originally, LG had anticipated flat growth in 2011 from 2010 levels, even as it expected the overall market to increase by 8%. Should LG’s volumes decrease as much as it anticipates, other vendors may jockey for position ahead of LG.

Apple maintained its number four position overall but closed the gap on Top 5 competitors thanks to another record unit shipment quarter. The company easily posted the highest growth rate of the worldwide leaders despite the fact that its flagship iPhone 4 is now more than a year old. The triple-digit shipment volume growth allowed Apple to more than double its share when compared to the same quarter last year. Apple’s ability to bring its smartphone momentum to developing economies, where it’s less successful, will help dictate the company’s smartphone fortunes in future.

ZTE likewise improved volumes and picked up market share during the quarter, enough to maintain the number five position. Long known as a purveyor of simple, voice-centric mobile phones, ZTE has stepped up its smartphone game with the continued success of its Android-powered Blade and Racer smartphones while announcing Libra, Skate, and Amigo smartphones for release in the second half of this year. Feature phones continued to be popular for ZTE, with the release of its 547i, a social networking-centric device in Europe.

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q2 2011 (Units in Millions)
Vendor 2Q11 Unit 2Q11 Market 2Q10 Unit 2Q10 Market Year-Over-Year
Shipments Share Shipments Share Change
Nokia 88.5 24.2% 111.1 33.8% -20.3%
Samsung 70.2 19.2% 63.8 19.4% 10.0%
LG Electronics 24.8 6.8% 30.6 9.3% -18.9%
Apple 20.3 5.6% 8.4 2.6% 141.8%
ZTE 16.6 4.5% 12.2 3.7% 36.0%
Others 145 39.7% 102.3 31.2% 41.7%
Total 365.4 100.0% 328.4 100.0% 11.3%

Source: IDC Worldwide Mobile Phone Tracker, July 28, 2011

Apple the world’s largest smartphone vendor, Samsung knocks Nokia from 2nd place

Friday, July 29th, 2011

iPhone 4

Apple's iPhone 4

Global smartphone shipments grew an impressive 76 percent annually to reach a record 110 million units in the second quarter of 2011. Both Apple and Samsung overtook long-time volume leader Nokia for the top two spots in our rankings.

Alex Spektor, senior analyst at Strategy Analytics, said, “Global smartphone shipments grew a healthy 76 percent annually to reach a record 110 million units in Q2 2011. We had previously reported on Apple becoming the largest smartphone vendor in terms of revenue and profits. Now, just four years after the release of the original iPhone, Apple has become the world’s largest smartphone vendor by volume with 18 percent market share. Apple’s growth remained strong as it expanded distribution worldwide, particularly in China and Asia.”

Neil Mawston, director at Strategy Analytics, added, “Samsung overtook Nokia to become the world’s second largest smartphone vendor in Q2 2011. Samsung’s shipments grew a huge 520 percent annually, for 17 percent global smartphone market share. Samsung’s Galaxy portfolio has proven popular, especially the high-tier S2 Android model.”

Tom Kang, director at Strategy Analytics, added, “Having become the first ever vendor to ship 100 million smartphones in a single year during 2010, long-time leader Nokia has slipped two places in our rankings in Q2 2011. The vendor’s 15 percent global smartphone market share is less than half of what it was just one year earlier, as the industry awaits Nokia’s pending transition to Windows Phone 7.”

Exhibit 1: Global Smartphone Vendor Shipments and Market Share in Q2 2011
Global Smartphone Vendor Shipments (Millions of Units) Q2 ’10 Q2 ’11
Apple 8.4 20.3
Samsung 3.1 19.2
Nokia 23.8 16.7
Others 27.1 53.8
Total 62.4 110.0
Global Smartphone Vendor Marketshare % Q2 ’10 Q2 ’11
Apple 13.5 % 18.5 %
Samsung 5.0 % 17.5 %
Nokia 38.1 % 15.2 %
Others 43.4 % 48.9 %
Total 100.0 % 100.0 %
Growth Year-over-Year % 50.4 % 76.3 %

The full reportApple Becomes World’s No.1 Smartphone Vendor in Q2 2011, is published by the Strategy Analytics Wireless Smartphone Strategies (WSS) service.

Two new data-breach bills introduced in the Senate

Friday, July 29th, 2011

Capitol BuildingWASHINGTON, DC – Two new bills centered on cyber security were introduced in the U.S. Senate Thursday, although its a wonder anyone noticed with all the debt-ceiling debate brouhaha.

Sens. Thomas Carper, D-Del., and Roy Blunt, R-Mo., introduced a bill that would require financial firms, retailers and federal agencies to guard private information investigate possible breaches and notify consumers if their information may have been compromised.

In a statement, Sen. Carper said, “At the very least, identity fraud can cause worry and confusion, and at the very most it can cause serious financial harm. We need to replace the current patchwork of state and federal regulations for identity theft with a national law that provides uniform protections across the country.”

Sen. Dianne Feinstein, D-CA, introduced legislation requiring organizations to notify customers when their personally identifiable information is compromised.

“It is past time for Congress to pass a national breach notification standard to ensure that consumers are notified when their information is exposed so they can take the necessary steps to protect themselves,” Feinstein said.

Her Data Breach Notification Act of 2011 would also provide additional information to law enforcement agencies to help stop future attacks.

It’s too bad it took major security breaches at Citibank, Epsilon, Sony and others to stir Congressional action.

We also think it’s an industry shame that company’s as technologically sophisticated as Sony and Citibank require serious security breaches before they take the problem seriously.

There really should be a law…

One of four wireless subscriptions will be pre-paid by the end of 2011

Friday, July 29th, 2011

New Millennium Research CouncilBy the end of 2011, total prepaid/no-contract wireless subscriptions in the U.S. will represent for one out of four such accounts, a new high-water mark reflecting the recent and rapid erosion of consumer reliance on more expensive contract-based cell phone plans.

According to new data released today by the New Millennium Research Council (NMRC) think tank:

  • About three out of five new wireless subscriptions in 2010 were for prepaid cell phone service versus contract-based “postpaid” service – a margin of more than eight million new no-contract prepaid subscriptions versus just under new 4.8 million postpaid subscriptions.   (Source:  J.P. Morgan, May 2011, covering the period from the fourth quarter of 2009 to the fourth quarter of 2010.)
  • While traditional prepaid service subscriptions lost ground from the fourth quarter of 2009 to the fourth quarter of 2010, unlimited prepaid posted strong gains with 7.4 million new subscribers, up 45 percent over that one-year period.   (Source:  J.P. Morgan.)
  • Based on current growth trends, the total non-wholesale wireless market in the U.S. will reach about 290 million by the end of calendar year 2011.   For the first time, non-contract prepaid subscriptions will account for roughly 25 percent of the total wireless picture, moving the U.S. more in line with wider use of prepaid in other nations.   (Source:  Mobile Ecosystem.)

The new prepaid trends are very much in keeping with previous forecasts by the New Millennium Research Council:

  • In March 2009, NMRC was the first to correctly forecast an imminent shift by cell phone consumers from more expensive contract-based cell phone service with often hefty cancellation penalties to less expensive no-contract prepaid service.
  • In March 2010, NMRC reported that – for the first quarter ever — the number of new prepaid wireless phone customers in U.S. eclipsed the number of new contract-based phone customers during the final three months of 2009.
  • Last November, NMRC released survey data showing that one in five U.S. cell phone consumers with contract-based service – an estimated 24.6 million American adults – could switch in 2011 to less expensive unlimited prepaid wireless service with no early-cancellation penalty.

Sam Simon, senior fellow, New Millennium Research Council, said, “NMRC was 100 percent on the money in forecasting that 2010 would be the year of prepaid wireless service.  It now looks like 2011 will be an even bigger year for no-contract wireless as more and more consumers realize the extent to which they can save hundreds of dollars each year with unlimited prepaid service while also avoiding the needless entanglements of restrictive contract-based cell phone service.   This penny pinching will go on even as others are attracted to prepaid by unlimited plans and for connected devices.”

Telecommunications analyst Mark Lowenstein, managing director, Mobile Ecosystem, said: “Prepaid services continue to become more mainstream, as attractive devices such as smartphones are offered by the leading prepaid operators. Also, we are seeing the market for additional connected devices such as iPads becoming a key part of prepaid subscriber growth.”

Go from casual to committed: create positive accountibility

Friday, July 29th, 2011

Walt ZeglinskiBy Walt Zeglinski

“If your employees don’t know where you’re going, almost any road will get them there.”  

These are words that send chills through the hearts of leaders everywhere. And it’s why they work hard to develop business plans for their workforce to follow. Even the best-intentioned, savviest business plans can fail if the organization lacks consistent employee commitment. But you can’t just mandate commitment. Organizations that achieve the promise of their business plan are able to create “positive accountability” – a powerful, healthy culture that results from goal alignment and workforce engagement.

Goal alignment is a common challenge, yet its solution can be as simple as how goals are established. If developed through a process of top-down collaboration with employees, strategic imperatives will cascade to frontline behaviors, dramatically impacting an organization’s success. Effectively channeling employees’ talents boosts their productivity and job satisfaction. And satisfied employees often become high-performing, passionately engaged employees.

Workforce engagement allows organizations to tap into their employees’ discretionary efforts. However studies show that only 1 in 4 employees comes to work actively engaged, or “on purpose.” These are the individuals that find their work personally and professionally meaningful. Of course this means that 75% of employees consistently fail to execute to their full potential. More disturbing, the same studies show that almost one-third of these are actively disengaged and can undermine the engagement of others.

Clearly, addressing alignment and engagement challenges can result in significant bottom-line dividends. Consider high-performance cultures like Google and Southwest Airlines. Two unique companies in very different industries, they both sustain their competitive advantage by leveraging the commitment of their employees. They have created cultures that drive alignment and engagement to achieve their strategic goals.

The Positive Accountability Model (below) helps to illustrate four different profiles that organizations typically fall into. Specifically, it examines how varying degrees of Goal Alignment and Workforce Engagement can result in Casual, Compliant, Chaotic or Committed cultures.

Positive Accountability Model

The Casual Culture

Employees in the Casual Culture are unclear about how personal contributions support their organization’s success and, often, they don’t care. Most organizations struggle with disengaged employees, but Casual Cultures have more than their share. You’ll often spot the Casual Culture in the wake of a merger, acquisition or new CEO. It’s often embedded in entrepreneurial companies, fueled by passionate, egocentric leaders, rather than by calculated ones who, instead, implement collaboratively planned process discipline.

In a Casual Culture, people often do mediocre work, maybe just showing up and following bare-bones procedures. They lack passion for the organization’s mission, and often don’t understand why or how they need to achieve both personal and company goals. The Casual Culture often operates in “survival mode.”

What to do? Use consensus-building to develop and implement strategies that establish clear goals and expectations, a Vital Factors metrics-based system to inspire success, and the means to hold people accountable. Once developed, the consensus plan must cascade down through the organization, and be communicated in both word and deed.

Leadership must also leverage the strong ties created by alignment to improve engagement. When people feel that their goals and tasks have meaning, they’re more likely to provide the organization with an extra measure of accountability that leads to goal achievement.

The Compliant Culture

A Compliant Culture is clear about individual goals, but not about how these goals connect to strategic corporate outcomes. The workforce may understand the company’s direction yet remain generally disengaged, resulting in a deceptive behavior pattern of doing what’s asked but little more. This creates the “it’s not my job” syndrome, as leadership finds it hard to tap into the discretionary effort of their people. Every manager has one or two people who fall into this behavior because of their personal style but, when it’s pervasive in an organization, it’s difficult to get things done and nearly impossible to implement change.

Overcoming this major accountability barrier, most often requires effective, inspiring leaders who encourage open, honest communication. If a safe environment can be established it’s possible to reverse this dysfunctional behavior. They enable team members to understand the business rationale behind their goals and take risk in an effort to achieve them. It will empower these employees to discover the alignment between what they do daily and their company’s goals. When an employee develops positive attitudes and beliefs relative to goal achievement, their motivation to maximize their potential grows along with the passion in their commitment to company results.

The Chaotic Culture

Most employees in a Chaotic Culture are engaged but unclear about their goals. Put simply, these cultures diffuse energy and squander talent, so there’s ample activity with little to show for it. Employees have the talent and passion for greatness, but their strengths can sour if not channeled into predictable, focused behaviors. Without clear expectations, confusion reigns in the Chaotic Culture. What’s more, studies show that employees commonly fail and leave organizations simply because they don’t know or understand the expectations.

What’s needed is goal clarity, managed by a leader who sets expectations and deadlines for achieving them. To ensure employee engagement, leadership should encourage their participation in building a plan based around SMART goals — those that are Specific, Measurable, Aligned, Realistic and Time-bound. Once that’s accomplished, an effective leader must hold the team accountable through regular performance assessments and check-ins, determining what goals have been met and any corrective action that should be taken

The Committed Culture

Engaged with a clear understanding of its goals, a Committed Culture both maximizes the potential of its employees and consistently achieve goals. It’s the healthiest of work environments — what every organization should strive to achieve. Employees work with clarity and purpose and, although they might not always meet all goals, they stay committed to an action plan to fulfill them. Because they have an understanding of what success looks and feels like, they can develop the attitudes and beliefs that release achievement drive. This provides the energy and motivation to execute with accountability.

A Committed Culture isn’t foolproof. An aligned, engaged culture must be nurtured to sustain performance standards. Regular progress reviews can ensure employees are meeting their goals and whether corrective action is necessary to stay on track.

Why strive for a Committed Culture? When your workforce is fully engaged and clear about its goals, your employees will be loyal to the core. And a loyal workforce is one that naturally inspires loyal customers – emotionally satisfied customers who refer new customers to you and generate repeat sales. An organization that develops a Committed Culture has unlocked the secret to successful plan execution and profitable growth. It has created a culture of Positive Accountability.

Walt Zeglinski is CEO & Chief Client Advocate for Management Action Programs (MAP), a performance-improvement firm that helps organizations achieve profitable growth. MAP’s performance and process solutions establish the disciplines that create a culture of accountability. Walt has 20+ years of successful experience in the corporate performance industry, with expertise in developing and implementing practical solutions for complex business challenges. He has worked with executive teams across most industries including financial services, healthcare, technology, hospitality and manufacturing. For more information, visit www.mapconsulting.com

Are we in a tech bubble? Four RTP entrepreneurs reflect national difference of opinion

Thursday, July 28th, 2011

American Underground

Artist's rendering of the American Underground space

RESEARCH TRIANGLE, NC – As new media companies roll out billion-dollar IPOs, four CEOs from the American Underground, an RTP startup hub, weigh in on whether the enthusiasm is on target or out of control.  Their differing opinions reflect the national debate. Some say yes, some say no.

Jason Massey, Sustainable Industrial Solutions:
“We are ABSOLUTELY in a new tech bubble!  Anyone that tells you different is financially benefiting from it or was not around for the last Internet bubble.

“Having been in venture capital through the last boom and bust the signs are almost identical from the last bubble.  While the funding vehicles are a little different, you still see ‘late stage’ investors clamoring to get into hot deals.

“But instead of trying to get into a rush of IPOs, investors are buying shares through secondary markets.  In the last bubble you had undergraduates running incubators.  Today, you see some undergrads doing venture capital work.

“It is not all bad.  As with the last bubble you had significant innovation survive the nuclear winter.  You will see the same in this bubble.  There will be innovation that improves quality of life.  Whether that is something like Zynga’s Farmville or Twitter it may still be a bit early to see who survives this shakeout but you are seeing the positive affects of Twitter and social networks in events like the Arab Spring.

“And while this crop of hyped companies do have impressive revenues and some profits, one thing is for certain, as second and third tier companies make their way through IPO markets and disappoint with collapsing numbers, you will see the secondary market implode, valuations will reset and lots of unsophisticated investors will lose money.  And the SEC will have failed us again.”

Keval Mehta, Jaargon Ltd:
“I don’t think that America is looking at a new ‘tech bubble.’  Tech is becoming part of our daily lives and affecting every single industry.  Tech is now more than just ‘web sites’ as it was in the last tech bubble.  Anyone with an idea, either good or bad, got funding.  Investors, entrepeneurs, and the general public are now more aware of what’s a good idea and how it can affect them in their day to day lives.

“This rationale alone will prevent another tech bubble.  Zygna in gaming and Groupon in commerce are single-handedly disrupting their individual industries with their products, and their valuation and sending a ripple affect in the tech industry.

“Their affect and valuation are allowing investors who are sitting on a lot of cash that they were unwilling to spend in the recession to now start seeking investments.  It may be starting another gold rush.  In our company we feel there is a huge void in healthcare technology.  It is one of the most untapped markets when it comes to consumer tech and healthcare.  We hope to fill in that gap with products and services that allow users to use tech to manage their healthcare.”

James Avery, Adzerk:
“The companies going public today have significant revenue and growth – something that didn’t exist in the last bubble.  Zynga is bringing in around $1 billion a year in revenue. Groupon brought in $645 million in the first quarter of 2011 (although they still lost money). Even Pandora, which went public recently, is close to hitting $100 million a year in revenue.

“We will know we have hit a bubble when the companies getting huge valuations aren’t generating meaningful revenue.  When you look back at the big busts in 2000, WebVan went public at a $6 billion valuation and they had under $4 million in revenue ALL TIME before their IPO. Pets.com revenue only hit $5 million in the quarter before they went public. People started claiming it was a bubble when Google went public at such a high valuation – but I think with a time machine any one of us would go back and buy their stock at the IPO price.”

Nick Jordan, Smashing Boxes:
“In short, I believe we have a flawed system.  on the one hand, you have companies like Amazon and Google, where the majority of their current market value was created after their IPOs.  That means that the founders and investors who took all of the risk made less off the entire deal than your everyday stock investor or mutual fund.

“On the other hand, with these hyper inflated valuations, you have a lot of VCs who need to make a certain return on their investment, so they pump up prospectuses and pass off the risk to these same mutual funds and average Joe investors.  Neither is ideal.”

One thing we have heard repeatedly at Tech Media digital conferences is that while there may be valuation boom for Internet firms on the West Coast, that is not true in the Northeast or Southeast.

See also: Infographic: Tech boom or bubble? You decide

Venture capital performance in Europe outperforming U.S., report says

Thursday, July 28th, 2011

EarlyBirdEarlybird Venture Capital today issued “Turning Venture Capital into Wisdom: Why returns in Europe are now outpacing the U.S.,” a 40-page report demonstrating that European venture capital funds have actually generated comparable or better returns than their U.S. counterparts over the period of the last two years.

The report is released amid fevered debate that has taken place regarding the venture capital returns secured in Europe vs. the United States, as well as the spirit of entrepreneurism in both regions.

Earlybird Venture Capital analyzed data from the European Venture Capital Association (EVCA), Dow Jones VentureSource and its own internal fund to come to the finding that, despite the ongoing dampened perception of European venture capital, the last 24 months have seen a better quality of returns for European VCs than for their U.S. counterparts. The report suggests that, after 20 years playing catch-up to the U.S., European venture capital truly has reached an inflection point, with better real performance among key indicators for the first time in history.

Some of those key indicators include:

  • Proportionally, Europe venture capital is now producing higher exit multiples than U.S. venture capital, as well as higher capital efficiency.
  • Europe has seen some $15 billion in venture-backed liquidity events during the past two years. This represents half of the $30 billion in U.S. venture-backed liquidity events during the same period, yet occurring with only one fifth of the venture funding.
  • Since 2005 there have been an impressive 14 venture-backed exits of European start-ups larger than $1 billion — among them Luxembourg’s Skype, Swedish open source company mySQL, British sports betting platform Betfair and German online mortgage broker Interhyp.
  • European VC-backed pre-and post-IPO performance also now matches or exceeds that of U.S. counterparts, while a higher share of European VC funds demonstrate top U.S. quartile performance.

“Clearly the message that venture capital is alive and well in Europe hasn’t gotten out. European entrepreneurs and VCs, for one, are notoriously shy about promoting themselves,” commented Jason Whitmire, Partner at Earlybird. “The reality is, there are great venture opportunities in Europe, even if not all deals are making headlines.”

The report is available in its entirety as a Slideshare presentation at: www.slideshare.net/earlybirdjason/earlybird-europe-venture-capital-report.

Top 5 best security practices, failure rates, and recommendations

Thursday, July 28th, 2011

VenafiThe  the 2011 IT Security Best Practices Assessment revealed an epidemic of security worst practices, with a majority of organizations failing to adhere to simple data protection standards. In many cases, it revealed that many organizations are critically unaware of what security practices are currently in place.

Venafi, the inventor of and market leader in Enterprise Key and Certificate Management (EKCM) solutions, in conjunction with Echelon One, an IT security research leader specializing in security programs and guidance, conducted the survey.

Complete the self-assessment and read the full report at: 2011 IT Security Best Practices Assessment

“The assessment findings were startling. We suspected we would find that many organizations were challenged, but we had no idea that failure rates would run this high,” said Bob West, founder and CEO of Echelon One. “The good news is that with this information and free self assessment, organizations can see where they rank in comparison to peers, and determine where weaknesses exist. They can identify steps to significantly reduce security and compliance risks by leveraging automated processes with multi-layered data security strategies, including managed encryption.”

Top 5 Best Practices and Failure Rates

The assessment evaluated where organizations rank in the implementation of 12 IT security and compliance best practices, ranging from how organizations leverage and manage encryption to how often they conduct security awareness and training programs. The top five best practices, their high failure rates, and recommendations for mitigation include:

  • Best Practice 1: Perform quarterly security and compliance training. Failure rate — 77%
    • Recommendation: Deploy technologies that compensate for lack of training resources by removing opportunities for human error through automation.
  • Best Practice 2: Encrypt all cloud data and cloud transactions. Failure rate — 64%
    • Recommendation: Salesforce.com, Google Apps and other cloud applications do not encrypt by default. Deploy third-party technologies that encrypt cloud data — both in motion and at rest — to enhance security, compliance and privacy.
  • Best Practice 3: Use encryption throughout the organization. Failure rate — 10%
    • Recommendation: Although the low failure rate seems encouraging, failure to implement management technologies can turn encryption into a liability by exposing keys and certificates that provide unrestricted access to seemingly secure data. Deploy technologies that can manage encryption assets across the entire enterprise.
  • Best Practice 4: Have management processes in place to ensure business continuity in the event of a Certificate Authority (CA) compromise. Failure rate — 55%
    • Recommendation: Digital certificates rank among the most ubiquitous security technologies. However, as recent CA breaches demonstrate, certificate authorities have been and will continue to be compromised. Using a CA is only half the battle — to further reduce risk, have a plan for immediately replacing all certificates and encryption keys generated by the compromised CA.
  • Best Practice 5: Rotate SSH keys every 12 months to mitigate the risk incurred by average two-year employee turnover rates of service. Failure rate — 82%
    • Recommendation: SSH keys provide servers and their administrators with root-level access to critical systems and data. A key-rotation period that far exceeds the average employee’s lifecycle significantly increases the risk that a former employee or malicious admin can gain unfettered and unauthorized access. Enterprises that do not rotate keys fail to understand their significance and related security vulnerabilities. Deploy technologies that simplify and automate key rotation.

The assessment further revealed that almost 100 percent of evaluated organizations had some degree of security, compliance or operational risk.

  • When asked if their organizations encrypted data stored in leading public clouds such as Google Apps, Salesforce.com and Dropbox, 40% said they did not know.
  • When asked how often critical encryption assets such as SSH keys were rotated, 41% responded that they did not know.
  • When asked if their organizations were using encryption keys and certificates for data security and system authentication, 10% said they were not.

“The biggest security struggle organizations face today is managing the unknown — a.k.a. the unquantified and unmanaged risks. Your best security assets can easily turn into liabilities if not managed properly,” said Jeff Hudson, CEO of Venafi. “If this assessment demonstrates anything, it’s that IT and security departments have got to gain greater visibility over all of their security and compliance activities, and take steps to better understand and manage them.”