Howard Tsung
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Toy warfare heats up as Elmo goes missing

On the 10th anniversary of it's fabled 1996 launch and subsequent rise to notoriety as the most sought after toy for 1996, at least 100 Tickle-Me Elmos have gone missing. More specifically 100+ T.M.X. Elmos (10th anniversary edition) went missing on Oct. 31 while en route to a Wal-Mart Stores, Inc. (NYSE:WMT) location in Betonville, Ark.

While the 100+ missing Elmos won't adversely affect Wal-Mart's bottom line, its the consumer sentiment that Wal-Mart is concerned with.

As the holiday season nears, shoppers begin to exhibit zealousness in obtaining the "fad" toys for the year. If Wal-Mart is seen to be lacking the "hot" toys for the year, it could easily find its customers scouring the shelves of competitors like Target Corp. (NYSE:TGT).

The T.M.X. Elmo is on industry benchmark Toy Wishes annual "Hot Dozen" and already making headlines with tales of armed muggings for the doll.

While Wal-Mart has offered a "reward," no specific amount has been announced yet. Though if 1996 was any gauge and demand outstrips supply again, market value per doll could easily break the $1000 mark.

Though they cater to a different market segment, the other major items to watch for this holiday season are the Wii from Nintendo and the PS3 from Sony which have already garnered enough attention for eBay, Inc. (NASDAQ:EBAY) to post a special set of rules regarding auctioning these items.

[Photo via Fischer-Price]

Google's new AdWords office shows high hopes for ad revenue growth

Google Inc. (Nasdaq: GOOG) has just taken another step on the road to ramping its ad revenue model (AdWords) with the opening of a new office in Ann Arbor, Michigan. The office launches with 20 people but is expected to employ 1,000 people within five years.

A purported $38 million in tax breaks over 20 years could be part of the incentive for Google to open the office in Michigan, but it makes sense to have the office located in Ann Arbor because it is in the same time zone as New York City (GMT -5:00), which has a proportionally high number of corporate headquarters. West Coast sales could likely be handled by a department within Google's Mountain View headquarters.

The other takeaway is that Google is planning on having 1,000 people within five years. Seeing as it has roughly 6,000 employees currently and the current staff dedicated to AdWords sales in Michigan is just 20 (of course the current sales team is probably part of the 6,000 and the 20 is in Michigan is focused on hiring), Google is clearly feeling very optimistic about future ad revenue and its own success.

Of course, Yahoo! and Microsoft are both just as optimistic about the ad revenue model pioneered by Google; having launched their own services earlier this year. And AOL has begun the transition from ISP service to content provider and portal focused around, what else, ad revenue.

GE sells unit for $3.8 billion

GE announced today the sale of its Advanced Materials Unit to private equity firm Apollo Management LP for $3.8 Billion. GE's Advanced Materials Unit specialized in producing specialized silicon and quartz based products.

After all is said and done, GE will see more than $2 billion in proceeds from the sale. GE is not in dire need of cash to cover losses or debt, so the sale is driven only in part by revenue generation. The other aspect of the sale, and likely the more important one, is that GE's management is beginning to acquiesce to pressure from shareholders and Wall Street (analysts) to consolidate its business lines.

Jack Welch, during the course of his 20-year reign, took GE from $12 billion to roughly $280 billion and along the way took GE from a core line of business to having part of an almost innumerable number of different businesses.

Since he stepped down in 2001 though, the company's share price has languished as management has not quite been able to fill the void of his departure (covered by Victoria Erhart). There has been an outcry that GE needs to shed its non-core businesses and focus on the basic three: Industrials, Entertainment, and Financials.

Though some clamor that GE should take a step further and split the company into the aforementioned components.

AOL receives bids for German ISP business

In the post-Icahn aftermath, bids are starting to come in for AOL's German ISP business.

Earlier in the year, AOL had reviewed with its bankers (Citigroup) selling off AOL Europe completely. As the high-profile battle between Icahn and Parsons concluded late February with an agreement by Time Warner to repurchase $20 billion in stock, AOL is now in the midst of developing a new strategy rather than looking at a fire sale of its assets.

In line with that, AOL Europe is likely off the block, in that AOL's strategy has been to move away from the ISP business but stay fully committed to a strong net presence. The German ISP business is the largest of AOL's European ISP holdings and its initial price target was 600 million Euros (latest spot rate).

AFX via Forbes reports today that offers have come in under that price, in the 400-450 million Euro range.

Conflictingly, Reuters carried an article which placed the bids "well over" $766 million (using a conservative 1.25 EUR/USD = 612.8 million Euros), essentially saying that there has been a bid "well over" the 600 million Euro initial target.

AOL continues overhaul with MusicNow launch

In AOL's continued makeover from bloated-has-been to its new target of lean-mean and on the cutting edge, AOL today has announced the launch of a music download service to complement its recently purchased MusicNow service.

The download service will offer some 2.5 million audio tracks for download at the iTunes established market price of $0.99 per song and music videos for $1.99. This comes on the heels of yesterday's launch of AOL's video service covered here by Brian White.

Additionally AOL Music Now will offer two subscription services. For $9.95 the user will have unlimited streaming and downloading to the user's computer. At $14.95, the user will have the features of the $9.95 service as well as the ability to copy the files to a PlayForSure device.

AOL's music history in quick recap: first, the company started with MusicNet in 2003 (strictly for AOL users), which followed with 2005 purchase of online site MusicNow. Since November AOL has launched a preview version of the new AOL MusicNow service (available to all users).

While the service is constantly undergoing refinements, the latest reviews (April/May 2006) from CNet and PCMag score the service in the Good to Very Good range, respectively.

Continue reading AOL continues overhaul with MusicNow launch

First Apple fire in Japan

In a follow up to the developing story of battery recalls by Apple Computer Inc (NASDAQ:AAPL) and Dell Inc(NASDAQ:DELL), the first report of an Apple laptop catching fire in Japan was just reported Tuesday.

Japanese authorities have ordered Apple to launch an investigation and report its findings back within a one week. Japanese authorities have asked Dell and Sony to do the same.

Thus far in the saga of battery recalls, Apple has started the recall of 1.8 million batteries and Dell has initiated a recall of 4.1 million batteries. Both recalls are linked to lithium-ion batteries made by Sony Energy Devices Corp., a subsidiary of Sony Corp.

Apple has received nine reports of battery fires in the US, with two of the reports involving users suffering minor burns. The recent case in Japan also involved the user suffering minor burns.

This is certainly becoming more pandemic, as the cases are no longer isolated to the US markets.

This does not bode well for Sony, which is betting heavily on the successful launches of two core pieces to its medium term strategy -- that of its PS3 multimedia unit and Blu-Ray standard. Apple and Dell are two principal backers of Blu-Ray.

Dell recalling 4+ million laptop batteries: who's to blame?

dell laptopIn what will be the largest electronics-related recall ever conducted by the Consumer Product Safety Commission, Dell is preparing tonight to initiate a recall on 4.1 million laptop batteries. This comes as the world's largest PC maker has been facing stiffer competition to its core PC and server businesses, as well as investor concern.

The recall stems from at least six reported incidents of Dell laptops catching on fire seemingly spontaneously. There have been various photos and stories circulating since mid-June and a web search should turn up various hits.

Most all major PC makers have suffered issues with laptop batteries requiring a recall, but to put in perspective the magnitude of the recall, the last two battery recalls Dell has had to make were 22,000 in December of 2005 and 284,000 in May of 2001. Looking at its competitors, Apple's last two battery recalls were 128,000 and 28,000 in May of 2005 and August of 2004, respectively. Earlier this year HP recalled about 15,700 batteries and in October 2004 had a recall of 135,000 batteries.

So who is the culprit here?

Continue reading Dell recalling 4+ million laptop batteries: who's to blame?

Google to digitize University of California libraries

In a move that already has the Association of American Publishers, Authors Guild, and Association of Learned and Professional Society Publishers in an uproar, Google has secured rights to digitize all the books in 100+ libraries spread throughout the University of California's 10 campuses.

The Google Book Search initiative is premised around scanning any and every book it can obtain, then allowing users to search for a book based on its contents and how they correspond to the user's search parameters. This is important to Google because the more content that is searchable, the more users Google can attract, and the more pay-clicks it can generate through its AdWords mechanism.

Google Book Search's main competitor is the Open Content Alliance (OCA), an open-source counter move launched by Microsoft and Yahoo!, which has already secured rights to the University of California libraries 'un-copyrighted' works.

The Google Book Search initiative differs from the OCA in two distinct ways.

1) The digitized material obtained by Google will be searchable only via Google while the OCA will have its digitized works available via Yahoo!, the OCA's own public portal, and will support various initatives to expose the data to the public.
2) The OCA is digitizing only un-copyrighted works, while Google is digitizing both copyrighted and un-copyrighted works.

The second point surrounding digitizing copyrighted works has landed Google in the familiar hot-seat as it is facing two lawsuits by the Association of American Publishers and Authors Guild, respectively. Google however contends that it is not breaking any copyright laws and is within the realm of 'fair-use' because it does not display the full copyrighted texts, only snippets of text, but allows the work to be identified via search.

The OCA has so far amassed a greater collection of works, although only un-copyrighted works. In the academic realms Google has signed on Harvard, Stanford, and the University of Michigan.

Yahoo! will thus eventually have a respectable book search, but will not be the leader in the field as the OCA's digitized archives will be available via other channels. Yahoo! also does not provide as robust a search as Google, which will identify for a user all relevant works, including copyrighted material (though they will limit the content that is displayed).

This is a huge win for Google, as the more copyrighted materials it can get a hold of, the more it will distance itself from competitors.

AOL drops the ball on user privacy

In what will likely be a catalyst for another heated debate over user privacy, the internet, and data aggregation by major portals such as Google and Yahoo!, today AOL finds itself in the spotlight.

Three months of detailed search data aggregated by AOL for roughly 657,000 of its 20+ million users were found distributed on the internet. AOL claims that it only stores one month of search data on its users but the roughly 657,000 records dating back to three months were part of a special group used by its internal researchers to enhance AOL's search algorithms.

AOL promptly issued apologies and is trying to salvage the situation, but the data is already circulating the internet and despite AOL's system of maintaining anonymity, assigning a number instead of using the users' names, the veil of privacy has been penetrated.In one prime example highlighted by the New York Times, user No. 4417749 was readily identified to be 62-year old Thelma Arnold of Lilburn Georgia.

This incident has drawn much attention as it is a realization of the fears and concerns voiced by many Internet Privacy and Internet Rights activists who contend that data aggregated by search providers in particular violates the privacy and many of the rights internet users expect to have.

Continue reading AOL drops the ball on user privacy

Microsoft's XBox 360 will become profitable by 2007

During Microsoft's analyst day yesterday, XBox360's unit president, Robbie Bach announced that the XBox 360 platform will reach profitability by next year and moreover attain "sustained profitability."

In Microsoft's bid to enter the video-game market dominated in recent years by Sony's Playstation and Playstation 2, Microsoft launched it's initial XBox at a loss to gain market share.

The same has held true to a lesser extent with Microsoft's next-gen XBox360, which has enjoyed the benefit of a first-mover advantage over Sony's next-gen console, PS3.

Robbie Bach's announcement is in-line with Microsoft's Nov. 22 launch strategy of attempting to remain gross-margin neutral through 2006, and enter positive margin territory in 2007.

The big variable factor in Robbie Bach and Microsoft's assertion is the launch of PS3; which has been fraught with delays and setbacks, but has the potential to send everyone back to the drawing board.

[Photo via Microsoft]

MSFT: Was this the best time for Bill to take a back seat?

Yesterday's Microsoft analyst meeting was a momentous day, not so much for key announcements and speakers but rather for a much more notable absence.

Namely that of William H. Gates III, who since he founded the company in 1975 has been synonymous with Microsoft and its identity. Despite the naysayers throughout the years who decried Microsoft for being the "Evil Empire," Bill Gates was the focus and ultimately it was he who steered Microsoft to the leadership position it still retains in the digital revolution.

What Bill's absence yesterday signals is Bill Gates' continued withdrawal from the business aspects of Microsoft. Since January 2000, Bill has been stepping away from the operational portion of Microsoft's business but has remained a key figure in strategic decisions and company direction.

The result is that as CEO Steve Ballmer and CFO Chris Liddell desperately try to assure analysts and investors that all is well despite April's less than ecstatic results, Bill Gates is on a seven-week vacation in Africa.

Microsoft's direction is murkier than it has been in quite some time. The next-gen versions of Microsoft's core products, Windows Vista and Office 2007 have been facing steady scrutiny on the back of continued release date delays. Concurrently with its core products being delayed, Google and Yahoo! have been maintaining strong leads over Microsoft's MSN in the net arena and muscling into the desktop space with software/application launches to whittle away further at Microsoft's core. Apple's recent switch to an Intel processor could herald further competition at the base PC market level (especially with speculation that Apple's new Power Mac will feature both an Intel processor and sport a Blu-Ray drive).

Based on the fourth quarter 2005 reorganization, Microsoft's three main divisions and products are:
1) Microsoft Platform Products and Services: core product - Windows, MSN
2) Microsoft Business Divison: core product - Office
3) Microsoft Entertainment and Devices Division: core product - XBox

With pressure on two out of three business lines to deliver and the MEDD division not out of the clear until Sony's PS3 launches, Microsoft is finding itself in the hotseat.

While Zune (purported iPod killer) and other new Microsoft initiatives sound intriguing, is Microsoft's future assured enough for Bill to take a backseat?

[Photo via Microsoft]

Microsoft to push IE 7.0 via automatic updates

In a bid to push its new suite of integrated applications and tools, Microsoft is planning its initial deployment of Internet Explorer 7.0 via Microsoft's Automatic Updates Service.

So as to not cause another WGA (Windows Genuine Advantage) debacle, whereby downloaded 'Automatic Updates' were functioning beyond the expected scope of users ('dialing' back to Microsoft Servers automatically); IE 7.0 will be designated as a High Priority download, but users will be able to opt-out of downloading the product.

While the opt-out option is certainly a nod to user choice advocates, distribution of IE 7.0 at all via the Automatic Updates channel is in question. Automatic Updates should remain a primary channel for security updates only.

Distribution of a product should be initiated through a product distribution channel, either through standard retail or Microsoft's Download Center.

Of course from a business standpoint, this is a very logical move for Microsoft, taking a play from classic marketing textbooks. Have customers 'opt-out' rather than 'opt-in'. That way, by default you are capturing market share, and only by effort of the end user are you losing market share.

With alternative OS options emerging in lieu of the upcoming Windows Vista (ie. consumer and commercial flavored linux releases) and market penetration of the Macintosh platform, it is imperative that Microsoft hook users onto individual Microsoft applications which through integration with other MS products will synergistically push the Microsoft platform.

In the standalone browser market, IE 7.0 will launch before Firefox 2.0, though Opera 9.0 has launched and has gathered a relatively small but loyal following.

Yahoo and Symantec launch co-branded Internet Security Services

Following on a number of fairly high profile tie-ups in the high-tech sector, Yahoo! and Symantec today announced a co-branded launch of Symantec's Norton Internet Security package. Currently, Symantec is the anti-virus provider for Yahoo! Mail. The tie-up will position Yahoo! as a distributor of the Norton Internet Security product via the Yahoo! network channels including: Yahoo! Mail, Yahoo! Messenger, Yahoo! Search, and Yahoo! Toolbar.

At launch announcement, the special release is available via Yahoo! Downloads. Symantec's Norton Internet Secuirty Package typically retails for $69.99 but via Yahoo! distribution channels, Yahoo! users will have access to a 30-day free trial of the product and a subsequent discounted purchase price of $49.99.

Additionally, plans were announced for a subsequent tie-in of Symantec's Norton Spyware into the Yahoo! Toolbar, likely replacing Yahoo!'s current AntiSpy feature (powered by Pest Patrol). A co-branded Toolbar is currently available which is a variant of the Yahoo! toolbar showcasing enhanced security options via Symantec offerings.

Continue reading Yahoo and Symantec launch co-branded Internet Security Services

Documentary release: 'Google - Behind the Screen'

With Google constantly the topic of talk, it comes as no surprise that Dutch film makers set about to create a documentary of the anomaly that is Google.

The result is "Google - Behind the Screen", produced with the support of Australian broadcaster SBS and aired in Australia, the documentary captures interviews with various mid to high level executives from Google and delves into the ethos within the company.

On this blog alone, we have struggled to define where Google and its policy of "don't be Evil" truly stand in the ensuing Digital Age of Information.

Lifehacker posts a brief video clip and discussion on the exploration of privacy and Google by the filmmakers.

While not groundbreaking with regards to uncovering or nailing down any definitive positions, it is a nice look at Google and many of the cheeky cliches and uncomfortable controversies surrounding Google.

Intel to cut 1000 jobs ahead of earnings report

In what may be just the tip of the iceberg in layoffs at Intel, 1,000 managers are to be laid off by the end of July.

Analysts are expecting more layoffs during the continued lead-up and follow-up to Intel's July 19th earnings report. If Intel misses another quarter forecast, it will be the third consecutive miss since 4Q'05.

Likely in a play to keep his job, CEO Paul Otellini has made a pledge to restructure the company within a 90 day review period. Intel will need to cut down fixed costs to boost margins and regain some of the flexibiltiy that competitor AMD seems to have no lack of.

Continue reading Intel to cut 1000 jobs ahead of earnings report

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Last updated: February 10, 2012: 04:00 AM

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