Archive for June 21st, 2011

Green Groups Blast U.N. Climate Panel for Alarmism


If you haven’t yet heard, hell froze over last week. Oddly enough, this is likely to be bad news for a warming planet.

Last Monday, more than 125 environmental groups sent a scathing letter to Rajendra Pachauri, the Nobel prize-winning head of the International Panel on Climate Change (IPCC), the institutional nerve center within the United Nations’ global-warming juggernaut.

The letter accused the IPCC of taking climate change ‘too’ seriously. In particular, the letter argued that the IPCC had no authority to sponsor a small meeting of climate scientists taking place tomorrow in Lima, Peru. The meeting will consider so-called “geo-engineering” options for responding to worst-case scenarios of catastrophic climate change.

By attacking the IPCC for responding to the risks of climate change too aggressively, the letter marks a major pivot in the politics of climate change, which have officially crossed into the twilight zone.

Over the past month, a series of reports have surfaced in the news media speculating about the significance of a small meeting of climate scientists sponsored by the IPCC taking place next week in Lima, Peru.

The meeting, which the IPCC organized, will evaluate the feasibility of so-called “geo-engineering” strategies to avoid or mitigate the adverse impacts of worst-case scenario climate change.

The term “geo-engineering” is a portmanteau used to describe two broad technical strategies “for the deliberate large-scale manipulation of the planetary environment,” according to the 2009 report by the United Kingdom’s Royal Society.

The strategies are categorized into two main groups: Solar Radiation Management (SRM) and Carbon Dioxide Removal (CDR). The specific proposals in each category range from deploying massive mirrors in outer space to deflect sunlight from entering the earth’s atmosphere to burying prodigious amounts of biochar to increase the amount of carbon dioxide sequestered in soil.

The IPCC, which is developing a scientific assessment of geo-engineering technologies, has described these categories like so:

SRM techniques attempt to offset the effects of increased greenhouse gas concentrations by reducing the amount of solar radiation absorbed by the Earth. This may be achieved by increasing the surface reflectivity of the planet, for example by brightening human structures, planting crops with a higher albedo, or covering deserts with reflective material. Other techniques aim to enhance marine cloud reflectivity by introducing sea salt aerosols in low clouds, mimic the effects of volcanic eruptions by injecting sulphate aerosols into the lower stratosphere, or place shields or deflectors in space to reduce the amount of incoming solar radiation.

CDR techniques aim to address the cause of climate change by removing greenhouse gases from the atmosphere. This would include advanced land use management strategies to protect or enhance land carbon sinks, and the use of biomass for both carbon sequestration (including biochar) and as a carbon neutral energy source. The removal of carbon dioxide from the atmosphere, either through the enhancement of natural weathering processes or direct capture from ambient air are further examples, as well as the enhancement of oceanic CO2 uptake through ocean fertilisation with scarce nutrients or the enhancement of upwelling processes.

The purpose of the meeting in Lima tomorrow is NOT whether to discuss actually doing any of these things, but rather whether to support research on the feasibility of doing so in the worst-case scenarios of climate change.

The IPCC explained the focus and objective of tomorrow’s meeting on its website: “Geoengineering . . . is increasingly being discussed as a potential strategy to counteract anthropogenic climate change . . . [the potential for] abrupt, nonlinear changes in the Earth system with possible significant impacts on human and natural systems suggest that research is needed into geoengineering options.”

In other words, the IPCC is considering whether it should support calls for expanding funding of geo-engineering research.

“Asking a group of geo-engineering scientists if more research should be done is like asking bears if they would like honey,” said the letter sent to the IPCC by groups including ETC, Friends of the Earth International and Via Campesina.

Many of the groups that signed the letter were instrumental in securing a moratorium on geo-engineering research under the U.N. Convention on Biological Diversity last year.

Ironically, while geo-engineering has provoked strong objections from environmental groups, it has simultaneously been embraced by politically conservative organizations like the American Enterprise Institute, which have historically opposed a strong policy response to climate change.

The geoengineering concept has also attracted significant interest from venture capitalists and investors like Bill Gates. Intellectual Ventures, a venture capital fund established by a former Microsoft executive, has invested in several start-up companies pursuing solar radiation management technologies.




Serious security breach at Pranab Mukherjee’s office: Report


According to a media report, Union finance minister Pranab Mukherjee had written to Prime Minister Manmohan Singh last year asking him to order a secret inquiry into the serious breach of security in his office.

On September 7, 2010, the finance minister wrote to the Prime Minister asking him to order a “secret inquiry” about the presence of “planted adhesives” in 16 key locations in his office, the newspaper Indian Express reported.

These locations included the office of Mukherjee himself, the office of his adviser, the office of his private secretary Manoj Pant, and two conference rooms used by the finance minister.

However, in his letter to the Prime Minister, Mukherjee mentioned that no “live microphone” or recording devices were found.

IB found nothing in office security breach at my office: Pranab

Finance minister Pranab Mukherjee on Tuesday said investigative agencies found nothing during their probe of the alleged security breach at his office in the North Block, PTI reported.

Commenting on the reports of a possible breach of security in his and other senior officials’ offices, Mukherjee told reporters on the sidelines of function, “In respect of news item, IB investigated into it and they found there is nothing.”



Infosys, Tata beat global majors to emerge as top brands in India


IT giant Infosys and salt-to-software conglomerate Tata have emerged as the top 2 brands in India, beating global majors like Google, Nokia and Facebook, in a new index.

According to TLG’s index of emerging market ‘Thought Leaders’, seven out of the top ten brands in India were indigenous firms.

TLG, in partnership with international research consultancy firm GlobeScan, launched the index wherein government ministers, directors of blue chip companies and newspaper editors were asked to identify corporate brands with the power to change the attitudes and behaviour of consumers, employees or politicians — defined as ” Thought Leaders”.

The list of top 20 firms was peppered with Indian brands including Larsen & Toubro (5th), State Bank of India (7th), Life Insurance Corporation of India (12th), Bharti Airtel (13th), Oil and Natural Gas Corporation (14th), Aditya Birla Group (15th), The Oberoi Group (16th), HDFC Bank (17th), Dr Reddy’s Laboratories (18th) and Ranbaxy Laboratories (19th).

“… Absence of many ‘western’ major brands from the top 20 may concern CEOs who are trying to crack the BRICs. They need to refocus their energies on telling their leadership story,” TLG founder Malcolm Gooderham said.

The top 10 features two joint ventures between local and overseas companies. The JVs are Maruti-Suzuki (4th) and Hindustan Unilever (9th).

Commenting on the findings, GlobeScan Research director Oliver Martin said, “As the public’s faith in corporate leadership is declining in India, companies must excel in business innovation and progressive CSR to retain a Thought Leadership position.”

The top-ranked foreign firm is Google, which enters the index at number three, followed by Nokia at sixth rank and Facebook at eighth position.

“Western firms that succeed (Google, Nokia and Facebook) are those that adapt their models to local conditions, or ones that form JVs with locals in the driving seat ( Suzuki, Unilever),” the report said.

Google, through its YouTube platform, streams live Indian Premier League cricket matches, while Facebook offers mobile access for a special rate of 1 rupee a day.

Interestingly, Apple, which leads the pack in Britain and America, failed to corner a place for itself in the top 20 list in India. Apple’s failure to adapt its business model to local tastes and budgets was vastly responsible for its inability to crack India.

“Indian consumers can buy a new Tata Nano car for the same price as three Apple iPhones,” the report said.



Green energy financier raises $200 million to build solar farms


Big Solar is about to get bigger.

Veteran renewable energy financier Matt Cheney has raised $200 million that his new venture, CleanPath, aims to use to jumpstart 1,000 megawatts’ worth of solar power plants over the next five years.

The $200 million in cash and credit comes from a single public company that Cheney declined to identify until it files a regulatory disclosure about the investment.

“Money will cycle in and out of projects,” said Cheney, who previously ran MMA Renewable Ventures in San Francisco. “The money we use to get things done over next four or five years will add up to $800 million.”

That’s because once a photovoltaic farm comes online, CleanPath will sell its stake and recycle the earnings into new projects. By providing capital to developers and working with them to get solar power plants to the construction phase, CleanPath hopes to attract $3 billion to $4 billion in financing to complete the projects.

“We’re a good partner and advisor and we have a brand,” said Cheney, who left MMA Renewable Ventures after it was acquired by the Spanish company Fotowatio. “And we have a lot of money and credit. The idea is to fill the gap where projects run into a capital intensity wall.”

With federal tax incentives for solar set to ratchet down or sunset in coming years, Cheney said CleanPath is set to serve as the middleman to arrange financing for projects.

Innovations in financing as much as in technology have proven to be crucial in deploying renewable energy at a scale that will make it competitive with fossil fuels. (CleanPath is currently pursuing another financing mechanism called “community solar” that allows people to own a specific piece of a solar farm.)

Most of the projects CleanPath will seek to finance will range from five to 20 megawatts and will, as Cheney puts it, “snuggle the grid” in or around urban areas. That will avoid the environmental costs and controversies surrounding building huge transmission projects to bring electricity from big solar power plants in the desert to the cities. (It’s probably no coincidence that California utilities Pacific Gas & Electric and Southern California Edison have launched initiatives to buy 1,00o megawatts from such installations.)

Still, Cheney said CleanPath is working on a few centralized solar power plants in the 200-megawatt to 300-megawatt range. All the projects will deploy solar panels like those found on residential rooftops in huge arrays on the ground. But CleanPath plans to install and test more cutting edge technologies, such as concentrating photovoltaic systems, amid its conventional solar farms.

“We’re trying to populate a portion of our portfolio early with smaller projects so we have time to the bigger ones up and running,” he said.

While CleanPath does not plan to operate and own solar projects, it may do so occasionally until a buyer can be found for a power plant, Cheney said.



Delicious Irony: Has Apple Recreated 1984?


Apple’s 1984 Superbowl commercial famously mocked the robotic followers of the then-dominant IBM PC and contrasted them with the fresh young blonde woman who was running free and willing to smash the screen to express her rebellion.

What are the facts?
While Apple has certainly created a feeling of liberation in millions of its customers, has it also recreated 1984 among its own retail sales staff? If so, is Apple sowing the seeds that will lead to its eventual destruction?

Yukari Iwatani Kane and Ian Sherr in the Wall Street Journal (Secrets From Apple’s Genius Bar) conclude that Apple’s intensive control of how employees interact with customers and scripted training for on-site tech support amount to demands for “Full Loyalty, No Negativity“.

That was based on limited information: confidential training manuals, a recording of a store meeting and interviews with around a dozen current and former employees.

Another reader (Emilio Martinez: @Emilio_CSRE) who says he is an ex-employee of Apple’s Fifth Avenue store questioned the facts of the WSJ article and suggested that Apple’s staff are less robotic than the Kane and Sherr imply:

Operationalization of How to Delight Customers” varies but most Apple Employees don’t follow the steps of service.

More intensive studies would be needed to get a comprehensive picture of the actual practices across Apple’s hundreds of stores.

However let’s be clear on a few points.



The Global Economic Slowdown A Plague on High Tech


There’s been a serious deterioration in the fortunes of America’s leading technology companies triggered by low economic growth in the U.S., a slowing in China, the trauma of Japan’s earthquake and tsunami, contraction in India and Korea, as well as the coming austerity in Europe.

The downturn has impacted network manufacturers like Cisco, computer manufacturers like Hewlett Packard and retail office products chains like Staples and Office Depot. The sudden slowdown of tech orders is a shock that reminds me of the sudden decline of bandwidth orders in 1999-2000 that slaughtered the telcom industry. This is no joke and must be closely followed in the manner of Fred Hickey’s “The High-Tech Strategist.”

Hickey sees weakness all about and opportunities to take advantage by buying puts on technology leaders. Here’s a smattering of his discoveries:

Reductions in government spending on IT in almost every developed market hurts 20% of Cisco’s business, cutbacks in AT&T’s wireless capital spending, in declining Global Service contracts at IBM, and at the prospect of downward revenue and earnings guidance at Hewlett-Packard.

The world’s largest computer products distributor, Ingram Micro, missed sales and earnings estimates. Tech Data sees consumer PCs and notebooks showing weak orders in Europe. Staples has cut its full-year sales and earnings guidance. So are a raft of other companies. Inventories are rising and companies are reducing their suggestions for earnings levels going forward.

Semiconductor companies like Texas Instruments look to be vulnerable to cutbacks in customer orders, and could be ripe for taking a short trading position. Applied Materials CEO Michael Splinter is guiding lower earnings estimates to Wall Street based on the climate of uncertain political unrest in the Middle East and a reduction in consumer confidence about the global economy

With the end of QE2–and the vacuum in Fed stimulus, Hickey sees a grand opportunity to short the shares of technology companies, whose share prices already have been gapping in volatile fashion whenever the market gets a surprisingly negative piece of news about orders and earnings.

So, add tech to finance, housing and some retail shares as the core of the economy’s coming slowdown–and you’ve got the makings of a strong reversal in the stock market over the early part of the summer.



Apple’s SaaS: Software as a Soul


Over the weekend, The New York Times ran a piece entitled Lessons in Longevity, From IBM. In it, author Steve Lohr looks back at the past 100 years of IBM and points out the keys to their longevity: shifting and adapting to new markets and times. He then lays how three tech powers today — Microsoft, Google, and Apple — may make similar moves to weather the inevitable storms.

At a high level, the parallels make some sense for Microsoft, and to a lesser extent, Google. They make no sense for Apple.

Microsoft and Google, as Lohr points out, are hugely successful companies right now. But their businesses have potential points of weakness because almost all of their money comes from one or two areas. In Google’s case, the one area is search advertising. In Microsoft’s, it’s Windows and Office (the Server division makes a good amount of money, as Lohr notes, but it’s peanuts compared to the two towers).

Lohr says that Microsoft up-and-coming gaming division could eventually be a key to saving them. And for Google, it could be Android. Again, this all makes sense (though is hardly anything new).

But when it comes to Apple, Lohr loses it. First of all, Lohr talks about IBM’s near-failure in the 1990s, but completely leaves out the fact that Apple too almost went under in the same time frame. In fact, they were much closer to death. Then Steve Jobs came back and — we all know the story.

The key is that Apple, as successful as they are right now, has already had to reinvent themselves. And they did it with stunning success. In fact, their reinvention has been more successful than IBM’s most recent reinvention. It’s just that Apple is not 100 years old. Nor is their metamorphosis something that any other company in the tech world (and perhaps beyond) is likely to be able to replicate anytime soon. And in fact, Apple’s metamorphosis is still ongoing.

And that leads to point two.

In remarking on the same article earlier today, Daring Fireball’s John Gruber tears into Lohr’s assertion that Apple’s hardware business could be easily “mimicked”. Specifically, he questions if Michael A. Cusumano, a professor at MIT that Lohr cites, understands Apple at all when he suggests that Apple in the future will have to shift to software and services to stay alive.

“I wonder if the professor thinks companies like, say, Rolex and BMW ought to shift to ‘software and services’ too?,” Gruber writes. He also notes that while Lohr brings up how Macs are still dwarfed in sheer unit sales by Windows PCs, Lohr completely disregards the fact that Apple is now in command in terms of profit share amongst PC-makers.

This is something which, comically, is almost always overlooked — even though it’s entirely deliberate on Apple’s part.

I also think that Lohr and Cusumano completely disregard something else important: innovation. As in, while it’s certainly possible that “Apple’s product designs, however impressive, will eventually be mimicked and come under price pressure,” as Cusumano suggests, that seems to be assuming Apple stands still and stops innovating in the areas of hardware design and manufacturing. That’s ridiculous.

I’ve been buying Apple products for just about ten years now (yes, that’s all). In that entire time, I’ve yet to see a product by a competitor that matches the build quality and aesthetic of Apple’s products in their major areas of focus (Macs, iPods, iPhones, and now iPads). Not once.

I know that sounds like just about the biggest fanboy thing to say… well, ever. But am I wrong? Even Apple haters cannot deny the quality of the products. Bitch about price, bitch about control, bitch about the fruit logo — but quality is simply never a compelling argument. Because Apple wins.

That hasn’t changed for at least a decade, and some would argue much longer. Why is it going to change all of a sudden? Because the manufacturing and designing processes will get cheaper? Sure. For shit products.

Competitors have been trying to mimic the look and feel of Apple’s products for much of this past decade. Guess what happens? They always come up short. We’re left with a ton of products that sort of, kind of look like Apple products, but never feel right. They feel like cheap knockoffs. Which is exactly what they are.

That’s part of the reason why I think Apple’s lawsuit against Samsung is silly. Is Samsung trying to mimic Apple’s products? Of course they are. Basically everyone is. But I’ve used a handful of the products Apple names in the lawsuit. And, well, a quote comes to mind.

“Senator, I served with Jack Kennedy, I knew Jack Kennedy, Jack Kennedy was a friend of mine. Senator, you’re no Jack Kennedy.”

If Apple fired their design teams and kicked Jonathan Ive to the curb, then sure, maybe in a decade competitors would be able to mimic Apple’s current designs and build-quality at a lower price that would threaten Apple. But that’s not going to happen. At least not anytime soon. And to not even bring up that fact is a slap in the face of what Apple has done in terms of manufacturing innovation and industrial design. Believe it or not, these things are an extremely important part of what makes Apple, Apple.

And none of that speaks to the astounding success Apple has had managing their supply chains. Again, there are good reasons that competitors aren’t able to copy Apple so easily. Under COO Tim Cook, Apple today is perhaps the most well-oiled machine the tech industry has never seen.

And there’s more.

In his WWDC keynote a few weeks ago, Steve Jobs said the following. “You know, if the hardware is the brain and the sinew of our products, the software in them is their soul.”

Obviously, he said this because WWDC this year was entirely about software with the unveilings of OS X Lion, iOS 5, and iCloud. But he also said for a much more important reason: Apple actually believes this.

Even though they make the vast majority of their money from selling hardware, without software, their great-looking machines would be absolutely worthless. Sure, you could jerry-rig them to run Windows, but then they would just be really expensive PCs. Apple doesn’t sell only hardware or only software — they sell the entire package. They sell the experience.

This is what the vast majority of their competitors do not understand. By outsourcing their “souls”, as it were, to Microsoft for PCs or to Google for phones, they can never do what Apple does.

One big exception may be HP. Despite their denials that they’re in the process of transforming their own business to be more like Apple’s, they are well, transforming their business to be more like Apple’s. With webOS now in place, they control the software (at least outside of PCs for now — but soon those too) and the hardware (not Apple-level yet, but you can be sure they’re working on it). Will that transformation work? Maybe. Maybe not. But give them credit for trying. At the very least, they seem to get it.

So when Lohr and Cusumano suggest that Apple may one day survive as a company that relies on software like iCloud to milk money-making opportunities out of things like advertising and marketing, you have to laugh. If anything, more companies are going to attempt to alter their models to be more like Apple’s, instead of the other way around.

Apple will remain in a position of power for the foreseeable future because they have nailed that model. And it is not nearly as easily assailable as the NYT piece suggests.

At the same time, Apple will continue to innovate, and yes, transform themselves. Most of their revenues now come from phones. Ten years ago, that was unthinkable. In another ten years, most of their revenue could come from tablet computers. Or maybe something else no one is thinking about right now.

Apple certainly won’t be becoming a “software and services” company anytime soon. They follow the “SaaS” model — that is, “Software as a Soul”. As in, the software cannot be decoupled from the hardware. They tried that once before. It was a disaster. It led to the near-collapse and subsequently, the complete reinvention that we’re seeing now.

They won’t have to “pull an IBM” because they’re already doing it one better.


Swati Jain

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