This, the first of our regional blogs, is authored by the technology and financial journalist Dominic Basulto. Dominic is a New York native, has been a senior editor at Corante since day one and has written for a number of online and offline media companies. Send tips or story ideas to: basulto@gmail.com.
About this weblog
Here we'll report daily on the latest tech and business developments in New York City. Impossible we concede: comprehensive coverage of the city's every story. What we hope you'll find: tips, tidbits and perspectives you won't find elsewhere. As well as unique insights, original interviews and more that should be of interest to New York's vibrant community of technologists and those who track, invest in and report on them.
The New York Post had a brief mention of "teenage video game whiz" Sal "Volcano" Garozzo of Manhattan College, who recently won his second straight world gaming gold medal. The total prize money was $50,000, which he will split with his four other Team 3D teammates. The five teens won the title at last week's World Cyber Games in Singapore, where they defeated teams from Pakistan and Kazakhstan playing "Counter Strike."
Anyway, it's interesting to see that the next generation of kids in Pakistan and Kazakhstan are growing up playing a counter-terrorism videogame. One can only imagine Osama & the Gang, gathered around their cave in the mountainous regions of Pakistan, playing Counter-Strike on a bootleg Xbox to pass the time.
Here's a feel-good story for the holiday season: Brooklyn High School of the Arts is one of only 13 high schools around the nation that is participating in Generation Link, a six-week program co-sponsored by EarthLink and AARP New York, in which Net-savvy teenagers teach seniors how to use the Internet. Since 77% of teens use the Internet and only 22% of seniors use the Internet, why not bring the two age groups together in an attempt to narrow the generational gap? During the course of the program, the teens teach the older adults how to surf the Net, while the seniors impart their wisdom and knowledge to the kids.
The Brooklyn program officially launched on October 20, according to the press release.
In search of the perfect "Black Friday" shopping nightmare story, the New York Daily News is playing this one for all it's worth: a story about shopper rage at a Circuit City store in Rego Park, Queens, where cops had to be brought in to calm down a furious mob desperate for $200 Toshiba laptops. The problem is that Circuit City only had a limited number of these laptops available for purchase, a fact that led to frustration and anger for a crowd of 500 deal-crazed shoppers. (Apparently, shoppers came from as far away as Jersey City to wait in line for more than four hours, all in the hopes of scooping up a bargain-priced laptop) An NYPD officer who commented on the incident put the blame squarely on Circuit City's shoulders: "It's irresponsible for the stores to advertise sales, get people all riled up and angry when they've only got like 30 computers in stock."
Yesterday, the print edition of the New York Daily News reported on the MTA's new plan for the creation of a "pocket-size E-ZPass." Essentially, this would be a smart card that would work on MTA subways, buses and commuter railroads; the Port Authority's PATH network and NJ Transit. Best of all, there wouldn't be a need to swipe the cards - in theory, passengers would just need to wave the smart card in front of a sensor, thanks to a tiny microchip embedded in the card. It certainly sounds good. It would finally give New York area commuters a "unified, seamless fare card" and end some of the annoying hassles of using MetroCards (i.e. magnetic strips that seem to get damaged within 24 hours of using a new card).
Newsday reports that Long Island-based Computer Associates is signing a lease for a new midtown office in Manhattan. The company reassured investors, though, that it will continue to have a "large presence" on the Island. The new 67,000 square foot office at 520 Madison will become the new home for about 120 employees in February. Computer Associates explained the move: "Certainly Microsoft and everybody else has offices here, so it's not out of the question. For most companies, especially those of larger size, there's a need to have a presence in Manhattan."
Last week, IBM announced a plan for some of its employees to teach math and science classes in New York City classrooms. Now, the company has even more good news - it's helping college students find jobs in the IT sector: "The new initiative allows students from accredited colleges and universities worldwide to post resumes to an online career center that will be made available to thousands of IBM clients and business partners that are hiring technology workers." The only catch is that students taking advantage of the service must possess at least one IBM professional certification.
A senior IBM exec interviewed by The Journal News explains what makes the initiative unique: "By linking business partners, customers and universities, we are taking the next logical step by connecting this talent with the information technology jobs of tomorrow,"
Information boards providing train arrival and departure times will soon be added to 131 subway stations over the next year, according to the New York Post. (Actually, the article says "stations" but I think it actually means "subway station platforms" or "subway station lines." Hence, the busy Times Square station would probably count as about 10 stations, for the 1,2,3,9,N,R,Q,7 and S lines.) The MTA's Chief Transportation Officer explains what it all means for New Yorkers:
"The new system gives date, the time of day and this one will have more detailed information about where the next train is, how far is it... It's a better system than we have today."
Anyway, it's a bit of clever psychology on the part of the MTA, actually. For the same reasons that some banks post waiting times and some delis hand out numbered tickets to customers, it's been proven beyond a shadow of a doubt that customers are willing to wait a significantly longer amount of time if they know "how long" they'll actually have to wait. So now, the MTA will have little or no guilt about admitting that the N and R lines are now running on the W line, and that means that the Q line is now running about 45 minutes late. Anyway, a big one-handed round of applause for the MTA.
From Saturday's New York Post: IBM has launched a new project to help up to 100 of its computer scientists become math and science teachers in city public schools. For now, the project will involve IBM employees in New York City and North Carolina before being rolled out nationwide. According to details provided by the company, IBM will pay employees looking to leave their corporate jobs for a teaching assignment up to $15,000 for tuition and stipends while they earn their state certification. An IBM executive, speaking in the East Village, commented on the plan: "We think it's the right thing for business and we know it's the right thing for schools."
In addition to the U.S. Open tennis tournament, there's another major tournament taking place in the city today and Saturday: the U.S. Finals of the World Cyber Games. At the Hammerstein Ballroom, videogamers will compete for $34,000 in prize money, as well as possible corporate sponsorships and a trip to the World Cyber Games Grand Final in Singapore in November.
The New York Post goes behind the scenes to look at the types of New York-area teens competing in the event -- like the 19-year-old New Jersey-based Verizon repairman who just happens to be one of the world's best players of "Counter-Strike." Or the Manhattan College sophomore who made $30,000 playing videogames last year. All told, there will be 16 teams from around the nation playing a wide range of different videogames in front of "thousands" of spectators.
Adam Balkin of NY1 reports on a new computer center on Manhattan's LES that will bring computers and Internet access to lower-income and homeless New Yorkers. According to the head of the new computer center, there will be 13 Internet-ready computers and a number of printers that will be available free of charge to any member of the local community. A big hat tip to Computer Associates for coming up with a $30,000 grant for Nazareth Housing to get the center up-and-running.
NOTE: The article says that the computer center is on the Lower East Side, but a little fact-checking only turned up an address in the East Village. Anyone know for sure which is correct?
Motley Fool has some good news: despite selling off its PC unit to Chinese computer firm Lenovo, IBM still hasn't lost its soul. Apparently, IBM researchers have cooked up something called the SoulPad - "a way to carry a powerful, personalized virtual computer (in the form of a USB key or some other portable device) from one PC to the next. The virtual computer's "soul" ... needs no new software and can simply be popped in and uploaded to a new PC via a USB, iPod, MP3 player, or cell phone."
So what's the takeaway lesson? Jack Uldrich of Motley Fool explains:
"This suggests that the era of being able to walk up to any computer and personalize it is now very near. And, if this is true, then the future value of PCs will continue to drop as it becomes less important that you have a computer and more important that you can access one."
After three years and $1.2 billion in R&D expenses, IBM unveiled a new line of mainframe computers - the z9 - that is "not only twice as powerful as its predecessor but also intended to make it easier for corporations to encrypt vast amounts of customer information and to bundle the workloads of many smaller computers onto an IBM mainframe." Mainframes represent only a small percentage of revenues these days for IBM, but are an important way to land follow-on consulting work and sell other products and services. Whatever you've heard, the mainframe computer is alive and well, says an industry analyst:
"IBM is doing what it needs to do, which is to continue to invest in the mainframe to take on new workloads, so it's clear it is not an old technology and that the mainframe is not dead,"
InfoWorld has more on the debut of the z9 mainframe line in New York, where IBM executives emphasized three key themes: openness, virtualization and collaboration.
Curbed points to the "before-and-(maybe!)-after" images of Apple's Flatiron mini-store. It's not just TekServe that is concerned about Apple's invasion of the Flatiron district, says the real estate blog of the New York Observer: a member of the Landmarks Preservation Commission has characterized Apple's new design as "brutally modern, and nothing to do with the context of the neighborhood." A former board member admitted that it was a "great-looking building" but that it was simply "in the wrong place."
Here's a way to spend Microsoft's multi-billion-dollar cash hoard -- pay it out to competitors that Microsoft has attempted to steamroll in the past decade. Today, Microsoft agreed to pay IBM $775 million to resolve antitrust claims that grew out of the U.S. government's lawsuit in the 1990s. Over the past two years, Microsoft has spent more than $3.8 billion to settle antitrust claims brought by customers and rivals. Despite the huge payouts, analysts and investors are actually kinda jazzed -- they see the moves by Microsoft as a sign that the software giant is putting its regulatory headaches behind it once and for all. Clean slate and all that.
The SEC is investigating some of the accounting numbers at IBM, concerned that the company may have improperly accounted for stock options in the most recent quarter. Right now, it's only an informal investigation, so there's no need to panic and dump your IBM stock.
However, it does raise the rather thorny question of how companies can account for stock options in a way that won't raise any eyebrows at the SEC. (anyone with even a passing familiarity with finance knows that the valuation of stock options is really a black art, not a science) IBM actually seems to have been more cautious than it needed to be in expensing its stock options -- which makes the SEC investigation a bit unusual. In fact, one Wall Street analyst says that the SEC is "over-reaching" its authority in the matter.
Steve Lohr of the New York Times points out the symbolic impact of IBM's decision to lay off 13,000 workers in Europe and the U.S. while simultaneously adding 14,000 Indian workers:
"Those numbers are telling evidence of the continuing globalization of work and the migration of some skilled jobs to low-wage countries like India. And I.B.M., the world's largest information technology company, is something of a corporate laboratory that highlights the trend. Its actions inform the worries and policy debate that surround the rise of a global labor force in science, engineering and other fields that require advanced education."
Unions are picketing IBM's headquarters in Armonk in an attempt to get the company to curtail - or even abandon - its workforce downsizing plans. For now, though, "there have been no signs Big Blue is about to blink," according to the Poughkeepsie Journal. Union pressure in New York is having less of an impact than one might suppose because most of the job cuts are planned for Europe; thus, most of the efforts within the U.S. are aimed at showing solidarity with their European co-workers.
Working off a rich selection of reference material that included videotapes, photos and historical essays, the new DreamWorks film "Madagascar" (opening May 27) was able to recreate a virtual Grand Central Terminal that is a near-identical replica of the original:
"It's almost as if someone who was doing a live-action shoot decided to replicate a set of Grand Central, built it to scale and lit it. That's kind of what ours is except it's done virtually, in the computer."
The film also features other New York landmarks, such as the Central Park Zoo, Fifth Avenue, Rockefeller Center and Times Square -- as well as famous human stars like Chris Rock and Ben Stiller.
Lenovo, which acquired IBM's "Think"-branded line of notebooks last year, has launched a re-branding campaign to introduce itself to America. The company is China's #1 PC maker and one of the country's most recognizable brands, but the name is not well known in North America. Anyway, Ogilvy recently landed the $100 million Lenovo Group account, and already, full-page ads are starting to appear in the New York Times and other mainstream publications.
So who or what is Lenovo? "It's the company you'd build if you could start over. Without starting from scratch. A company with the scale, infrastructure and customer base of a Fortune 150 behemoth. A company with the freedom, innovation and entrepreneurship of a start-up..."
Yet, not a word about China. No foreign faces in the ads. And no graphics that could be even faintly suggestive of Asia. Even the name doesn't sound Chinese (le novo = the new?)
According to the New York Times, IBM will announce an acquisition of open-source start-up Gluecode today. The deal is "small in size but significant in the evolution of the company's plans in open-source software, according to industry analysts." Exact terms of the deal were not disclosed, but most analysts expect the price tag to be less than $100 million.
IBM announced plans to downsize its workforce by 10,000 to 13,000 jobs worldwide, with the bulk of those cuts coming from its European workforce. The cuts, which represent approximately 3%-4% of the company's total workforce, come after a "bombshell earnings shortfall" last quarter.
Before the markets open today, IBM's CFO will hold a conference call with investors to explain the restructuring.
You failed to make your numbers this quarter? Fuh-get about a raise then. That's the story at IBM, where the company's top 50 managers will give up pay increases this year after the company had trouble making its sales numbers last quarter. Instead of blaming the overall economic environment or any other external factors, CEO Sam Palmisano was brutally frank:
"We found ourselves struggling in the first quarter. We attribute most of it to our own execution. It was us. It was our inability to close deals."
There could be a bit of bloodletting, too, if recent moves to boost the company's stock price fail to pay off. The New York Daily News reports that IBM is mulling over the prospect of cutting up to 10,000 jobs.
From SC Magazine: "Fans of hit Broadway musical Spamalot could end up getting lots of spam after a security glitch exposed names and email addresses of 31,000 visitors to the show's website." We're told that the glitch has since been fixed by New York web designer Mark Stevenson, who helped to build the site.
IBM has been given the green light to sell its PC business to China's largest computer maker, Lenovo Group, for $1.25 billion. The deal was finally cleared by a U.S. national security panel, according to Crain's New York. The Committee on Foreign Investment in the U.S. had voiced concern that China might conduct industrial espionage at IBM's Research Triangle Park facilities or gain access to technology with possible military applications.
Gothamist points to an article in the New York Observer ("Revenge of the Apple Nerds") about a brewing feud between Apple and Tekserve, an independent Apple repair shop that prides itself as a "true indie." According to some Tekserve employees, Apple has been specifically targeting the company with its two new locations in Manhattan in much the same way that Starbucks targets independent coffee shops with new locations. Gothamist calls it a "gentrification story within the niche technology sector."
New York City Transit has awarded Unisys a five-year, $105 million desktop support services contract. The agency also has an option to extend the contract another two years for an additional $38 million. According to Information Week, Unisys will provide desktop and IT management and support services for NYC Transit's 12,000 PCs and 350 servers.
In "You There, at the Computer: Pay Attention," Katie Hafner of the New York Times suggests that the "siren call of distraction" -- whether it is checking e-mail, reordering a Netflix queue, downloading iTunes or responding to an IM -- is ever-present for today's computer user. In fact, some psychologists already refer to this problem as "pseudo-attention deficit disorder." What's interesting is that a number of computer science experts are working on ways to solve this problem, such as by designing new interfaces or working on ways to make e-mail less intrusive. Psychologists are even coming up with ways to describe why leaving a task for even a few minutes can break up the flow of thought (i.e. "deep cognitive immersion").
After a 16-year-old Long Island girl was abducted by a 24-year-old convicted sex offender she met over the Internet, Newsday offers concerned parents some tips about how to control their kids' cyber-surfing activity. "What you want to do is be collaborative with your son or daughter,"says one Internet safety expert. "That means talking with them. Know who their cyber friends are as you would their school ones; know what chat rooms they visit as you would which homes they frequent. When they roam the Internet at all hours, view it as if they are strolling the streets."
The lesson is clear: "Parenting in cyberspace is no different than parenting in the real world." Computers don't cause cyber-stalkings, people do.
Ever had the feeling that you could somehow control the New York City subway system better than the MTA, if given half a chance? Well, NXSYS is a subway simulator that "recreates for you the experience of controlling switches, signals, and trains in the New York City Subway system. Rather than conventional menus and toolbars, NXSYS presents to you the exact same user interface as so-called "Entrance-Exit" "pushbutton interlockings" present to New York City subway towerpersons, except that instead of pressing buttons with your finger, you click with the mouse. And instead of commanding real trains full of people, NXSYS simulates them cybernetically..."
It's a cool idea -- but also a bit spooky, if you think about all the shady characters in the world who appear to bear some kind of grudge against New Yorkers (we won't name names, but they know who they are). Hat tip: NewYorkology.
IBM's pending $1.25 billion sale of its PC division to China's Lenovo Group has hit a few snags, according to the New York Post: "Members of the Committee on Foreign Investments in the U.S., including the Justice Department and Department of Homeland Security, worry that Chinese operatives might use an IBM facility in North Carolina to engage in industrial espionage using stolen technologies for military purposes." If the Committee on Foreign Investments does not approve the deal (and it has been notoriously difficult about approving China-related deals), IBM would need to participate in a formal investigation by government authorities and then receive the approval of President Bush.
Over the weekend, there was a Web domain hijacking that left Public Access Networks (Panix), a New York Internet hosting company, without an Internet address. As a result, as many as 5,000 Panix customers reported that they were deprived of e-mail access for 48 hours, starting on Saturday morning. InfoWorld looks into what went wrong, laying some of the blame at the feet of an Australian company that manages Internet domain name registrations. At Panix, there's no panic -- but insiders privately confide that "a permanent fix for the domain hijacking problem won't come without larger changes and cooperation from domain registrars."
From Crain's New York: IBM is teaming with six major technology companies (Sony, Toshiba, Samsung, Infineon, AMD, Charter) to spend $1.9 billion on an expansion of chipmaking at its East Fishkill plant. Thanks to Governor Pataki, New York state will kick in another $150 million in financing for this project.
In the final step of its globalization makeover, Chinese PC maker Lenovo Group is relocating its corporate HQ to Armonk, New York (IBM's hometown). Moreover, the company will "essentially hand over management of what will become the world's third-largest computer maker, after Dell and Hewlett-Packard, to a group of senior IBM executives." It's a bit of irony for anyone concerned about the loss of jobs overseas: "American multinational companies outsource manufacturing to China. Why can't a Chinese company outsource management to the United States?"
Yikes! Wal-Mart is selling a Linux-powered laptop for $498 -- the first-ever laptop to dip below the magical $500 price point. Analysts expect the market debut of the laptop to "accelerate Linux adoption" in the mass marketplace.
InternetNews.com has a wrap-up of industry opinion and speculation about IBM's decision to sell its PC division to Lenovo for $1.75 billion. Dell and HP, as might be expected, are trying to sow "fear, uncertainty and doubt" about the IBM-Lenovo deal. Many industry analysts, though, appear to view the deal in a positive light and as a potential market opportunity for IBM.
To see more on why "the Lenovo deal is more about IBM positioning itself for potentially huge future opportunities than it is about exiting a tough and tightening market," see this piece that I authored for Tech Central Station (IBM now stands for Increasingly Bigger Margins).
The deal that everyone will be talking about: as rumored last Friday, IBM has agreed to sell its PC unit for $1.75 billion to China's Lenovo, making the Chinese PC manufacturer the #3 player in the global PC market. From IBM's perspective, the deal makes economic sense: "If it goes through, the deal would allow IBM to continue its shift from selling so-called commodity products toward selling services, software and high-end computers. Although it helped make PCs a global phenomenon, IBM makes little profit from PCs and often loses money, despite the fact that it's an $11 billion business for the company."
Michael Dell, speaking at an Oracle conference, roundly criticized the potential sale of IBM's PC unit to Lenovo: "We're not big fans of the idea of taking companies and smashing them together. When was the last time you saw a successful acquisition or merger in the computer industry? It hasn't happened in a long, long time...I don't see this one as being all that different."
Word on the street is that Chinese PC manufacturer Lenovo is the leading contender to acquire IBM's PC unit for a price tag rumored to be close to $2 billion. Even the New York Times, though, was left scratching its head about the Chinese company: "Lenovo. Who?" Lenovo may be the world's fastest-growing PC maker and the 8th largest PC maker in the world, but the company is obviously hampered by a lack of brand recognition. Thus, a major consideration for Lenovo is getting access to the IBM brand, and more precisely, the ThinkPad brand -- one analyst interviewed for the article called the ThinkPad a "steppingstone to a global market."
Selling the PC unit to Lenovo is not a done deal, though. According to market rumors, IBM has hired Merrill Lynch to find other possible buyers. Neither IBM nor Merrill are confirming or denying the rumors, though. Rob Enderle of the Enderle Group is dismissive that the deal will actually get done: "The sale of the IBM PC unit to Lenovo is unlikely at this time, and the sale to another unnamed company while possible, is less likely due to the release of this story."
IBM is planning to sell off its entire PC division in a deal "likely to be in the $1 billion to $2 billion range," reports the New York Times. Frustrated by thinning profit margins and the commoditization of the PC market, IBM "long ago ceded the lead in the personal computer market to Dell and Hewlett-Packard so it could focus instead on the more lucrative corporate server and computer services business." While the move makes business sense, "a sale would nonetheless bring the end of an era in an industry that [IBM] helped invent."
