Frank Hayes, writing in Computerworld, does a great job recounting how an Excel to PDF conversion resulted in Barclays Capital making a multi-million dollar mistake in their offering to buy part of Lehman Brothers. In and of itself, it’s an interesting story, but Hayes concludes with this advice for using technology:
See a summary of all my Defensive Computing postings.
Agreed.
Keep it simple.
Don’t make assumptions.
And never, ever trust tech more than you really have to.
Starting Tuesday, however, Apple decided to open the kimono on its iPhone business in a new way.
And it also underscores that Apple has completed its transformation from a computer company into a consumer electronics company, the only computer company of its generation to successfully pull off that transition. They all tried, but no traditional PC company has managed to shift the bulk of its business from low-margin PCs to high-margin consumer electronics: the iPhone now represents 39 percent of Apple’s revenue using the supplemental metrics, while the Mac accounts for 30 percent.
A few words of caution are necessary regarding the use of supplemental results to evaluate a company. Apple posted a lengthy disclosure on the numbers in its press release, warning among other things, “these non-GAAP financial measures may be unique to the Company, as they may be different from non-GAAP financial measure used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company’s results to the results of other companies.” (Jobs, of course, did just that in ranking Apple third among all mobile phone vendors as measured by revenue, so there you go).
The problem with this accounting treatment is that it pushes most of the revenue associated with the sale of an iPhone out into the future, making it difficult for investors to determine just how much revenue and profit is being generated by the sale of a particular unit until long after that unit has been sold. In addition, Apple has to recognize engineering and marketing costs associated with the sale of those iPhones in the quarter in which they occurred, not over the 24-month period.
Apple uses a subscription-based accounting method to recognize the revenue from the sale of an iPhone or an Apple TV unit. Remember the outrage in January 2007 over Apple’s decision to charge certain MacBook customers $1.99 to unlock the faster Wi-Fi chip hidden inside their notebooks? The company didn’t decide to charge people because it was short on cash; Apple had to in order to satisfy accounting rules that require a company to establish a value for future upgrades if a decision was made to recognize all the revenue from the sale of a product at the time it was purchased.
Saying that Apple’s iPhone business “had become too big to ignore,” Apple CEO Steve Jobs made a rare appearance on the company’s earnings conference call earlier on Tuesday to explain just how much money the iPhone is dumping into Apple’s coffers. For the first time, the company used supplemental financial details to give some color on the contribution that the iPhone could be making to Apple’s bottom line if iPhone sales were handled like
Mac sales, and the numbers are astonishing.
(Credit:
Declan McCullagh/CNET News)
Total iPhone revenue of $4.6 billion would have represented 39 percent of Apple’s overall adjusted revenue of $11.7 billion, and would have ranked it third among all mobile phone vendors as measured by revenue after just 15 months on the market, according to the company. “If this isn’t stunning, I don’t know what is,” Jobs said.
It allows us to make imperfect estimates on just how much Apple is receiving in subsidies on each iPhone 3G. $4.6 billion in revenue divided by 6.9 million units equals $666.67 per iPhone. That’s a little high, since some portion of that revenue has to be attached to Apple TV sales, but even making the unlikely assumption that Apple sold $500 million worth of a product it calls a “hobby” during the fourth quarter puts the average cost of an iPhone 3G at $594.20.
The iPhone now accounts for 39 percent of Apple’s business, having generated $4.6 billion in revenue on sales of 6.9 million units during the quarter. (Apple TV revenue is lumped in with that number, but let’s be real: iPhone sales account for the vast, vast majority of that figure.) Those numbers, however, are not included as part of Apple’s official quarterly results because of the way the company chooses to account for the sale of each iPhone; Apple reported just $806 million in iPhone and Apple TV revenue for its fourth quarter in accordance with GAAP (generally accepted accounting principles).
To avoid the same situation with its brand-new iPhone customers, Apple announced shortly after the launch of the product that all iPhone revenue would be recorded over a 24-month period, allowing the company to ship software upgrades to the iPhone for free. Note that for whatever reason, it doesn’t apply that treatment to its Mac or
iPod product lines, meaning that Apple has to charge iPod Touch owners a fee for the exact same upgrades that iPhone owners receive.
But we’re still talking about real money. Regardless of how Apple decides to account for iPhone revenue, it’s still real revenue, and it provides cash for the company to invest in iPhone engineers (such as the former P.A. Semi team, for example), market the iPhone, and work on software enhancements to the product.
Apple revealed the numbers it uses internally to measure the performance of the iPhone business for the first time on Tuesday. Imagine Apple treated the iPhone like it did the Mac: it would have recorded an additional $3.8 billion in revenue and an additional $1.3 billion in net income during the company’s fourth fiscal quarter.
The rampant success of the
iPhone has forced Apple and its financial watchers to re-evaluate the value of the company.
The iPhone isn’t just the third leg of Apple’s business that Jobs promised it would become back in January 2007, when he introduced the iPhone and changed the name of the company from Apple Computer to Apple Inc. It’s now the single largest contributor to Apple’s bottom line.
So what gives? In order to explain, please permit me to wade through some boring-but-necessary Accounting 101 review.
When Apple Steve Jobs introduced the iPhone in January 2007, even he might not have realized how soon it would become a huge part of Apple's business.
Nearly the same thing happened several weeks ago with Microsoft. IDG News Service had reported that the software giant had instituted a hiring freeze, citing a source who had seen a company memo, but Microsoft said the report was not correct.
“Several executives I have spoken with who have hiring responsibility said it was made clear to them one month ago they were to make no new hires, including at the secretarial level, and they were directed to fill all vacancies with internal candidates. In effect, they term it an unofficial hiring freeze,” CNBC’s David Faber reported.
While reporting third-quarter earnings last month, Google said it has slowed hiring; in the third quarter, 519 new employees came aboard to raise the total full-time employee tally to 20,123.
Not so, countered Google: “We extended offers last week to 30 people,” said spokeswoman Jane Penner. “We’re hiring at a slower rate. We are continuing to hire carefully and strategically.”
Penner wouldn’t comment on whether freezing is curtailed in particular areas such as administrative positions. The company said during its earnings call that the biggest hiring category was engineering.
CNBC reported Tuesday that Google has an unofficial hiring freeze, but the search giant denies it.
I’m going to answer some of the most frequently asked ones here, but if you’ve got more, you know what to do. Put ‘em in the comments.
9. I want to consider using Skype, but I want to use it for calls when I’m in Italy–will it work from one location in Italy to another in Italy? And what number does the caller use to call me back, my U.S. iPhone number? If so, the caller would end up with international cell phone charges.
What I understand is that you have a U.S. iPhone and want to travel to Italy to make a call within Italy? AT&T would charge you an arm and a leg, so you want to use Skype over Wi-Fi to avoid those charges and to avoid buying a local or international phone card. If I got that right, in theory, you should have no problem initiating a call from Italy to an Italian landline (calls to mobile phones will cost more.)
1. If you’ve already got an iPhone, what’s the point of having another calling application?
2. If you’re on the road, you still can’t use your iPhone to make free calls with Skype, unless you can track down a Wi-Fi connection somewhere.
On the iPhone, you’ll be able to hold the phone up to your ear as you would when using the phone, though the application is also compatible with a headset and with speakerphone. Note, though, that you will need a microphone-equipped headset when using Skype with the iPod Touch.
Apple requires Skype and other voice applications to use Wi-Fi to place iPhone calls, not the hardware phone. Now without further ado:
At least at first, Skype was primarily used to place international calls for free to other Skype users, or to landlines at a reduced rate on par with a calling card, for example. If you’ve got family and friends living abroad, the application’s potential is a no-brainer.
3. Does Skype for iPhone use the native iPhone address book or a proprietary one?
Even if you do see a notification alert on the program icon after you’ve closed Skype, the number of missed calls you see won’t update to reflect the current number until you sign back into Skype.
5. Can you receive calls from your SkypeIn online number when you’re in a Wi-Fi hot spot?
Skype hooks into your iPhone’s address book from the dialing screen so you can easily call a non-Skype buddy using Skype credit you’ve purchased. The Contacts screen shows your list of Skype contacts, and it’s from here that you initiate a chat or call to Skype pals who aren’t in the phone’s address book.
7. Does the new Skype for iPhone allow you to make video calls?
First of all, some context. Skype for
iPhone is a voice over Internet Protocol, or VoIP, communications application that lets you chat with other Skype members for free, plus call landlines and mobile phones when you buy Skype Out credit. It is available in every country in which the App Store can be found, and it has already made a splash in the United States, Japan, and Europe.
4. Will Skype for iPhone notify me of missed messages or calls when I am running other apps, or when the iPhone is inactive?
You’ve had a lot of questions about the new Skype for iPhone (download)–how it works and even why anyone would want to use it.
6. Do you need a headset to make a call?
Yep. If you’ve already purchased a SkypeIn number, the service should work seamlessly on the iPhone without extra activation steps.
The sticky spot comes when you want your pal to reach you. The most cost-effective solution is for your buddy to also sign up for Skype. Failing that, you could also pay for a Skype-In number for your friend to contact you, but see Question 8 for complications. If you want to be cost-conscious with your contact, I might try other communication avenues–instant messaging, IM, and e-mail, all which you can easily check on iPhone while doing other things. There’s always the low-tech way of doing things–your contact e-mail or IMs you to let you know they’re ready for that call.
8. Can you also forward your mobile calls to your Skype-In number? If you can, presumably you can avoid time charges from your mobile carrier by making and receiving all calls with Skype as long as you’re somewhere where you can get a Wi-Fi signal.
No, it doesn’t. This is a feature that Skype hasn’t appeared to have figured out. The technology is out there, however. One company, iVisit, has been showing its video conference call technology for at least the last year. Rest assured, video Skype will be huge news when it comes out, on any mobile platform. Mobile video is so essential these days, that whichever VoIP app manages to get there first will undoubtedly get all the glory.
Sure, you might not need to use Skype if everyone you know and love lives within a 500-mile radius of you. Yet users have already chimed in with examples of domestic uses, like if your home has a weak cellular signal but strong Wi-Fi; or if you eat through your free-talk minutes, a low-rate VoIP service like Skype will cost you less than the carrier’s charge for each minute you go over your plan.
Also, even when you’ve got a laptop or desktop handy, and could use VoIP on the desktop, a calling client on the mobile phone gives you the freedom to wander. You won’t be able to see your pals with the Webcam from the iPhone, though, so there is a trade-off.
Updated April 3, 2009 at 11:00 am PT with more questions and answers.
(Credit:
Skype)
If you’re in the United States, AT&T allows iPhone users free access to AT&T hot spots without incurring extra charges, though if you’re attempting a call, you might not want to start it in the middle of Starbucks.
Also, don’t forget that
iPod Touch owners can use Skype and other VoIP applications (like Truphone and Fring) to make calls, even though the iPod has no telephone hardware–you just need earphones equipped with a mic.
This wouldn’t actually work in your favor on the iPhone if you intend to use the device for anything other than waiting to receive a call. Remember that Skype is only active when you’re signed in, and cannot run in the background due to Apple’s rules and regulations in its version 2.0 software. My impression is that most people will use Skype for iPhone to dial out, either when they’ve got a phone date planned, or when there’s a chunk of free time to call a friend while out and about, perhaps while waiting at the airport, for example.
Yes and no. You’ll see notification circles of a missed message or call on the separate screens when you’ve got the app running, and again on the program icon, if you close the application with unread chats. Yet since Apple doesn’t let you have more than one application running at a time with iPhone 2.0 software, you won’t get an alert, if you’re using another app and someone tries to reach you (you’ll appear offline to them, anyhow.)
The takeaway? Money will still be spent in 2009, but more strategically. Technology needs to prove itself first, and buyers will likely flee to the safety of established vendors or partners. This makes me wonder whether the Accentures, and SAICs of the world will finally start to adopt and promote open source more heavily in 2009, given that customers will be demanding software that meets its characteristics?
Also interesting is to see where business partners expect to focus so as to drive revenue in 2009:
The data are interesting:
2009 Forecasted Sales Focus
(Credit:
CMP Media)
I’m at a Red Hat channel event, listening to Toni Clayton-Hine, managing director of The Institute for Partner Education & Development at CMP Media, talk through software acquisitions in the recessionary economy, especially as it pertains to business partners (resellers, system integrators, etc.).
CMP Media surveyed 250 North American partners to try to get a read on their customers’ spending priorities and directions, as well as channel priorities for 2009.
Economic uncertainty is pushing companies to prove technology before buying it, which skews toward open source, which is all about trying before buying;
There are fewer trusted options. Many vendors meet or exceed requirements, so buyers want to spend with brands they trust. (Note: Ironically, the “try before you buy” mentality will not always mesh well with this requirement, due to conflicting licensing models);
End customers are planning smaller initial projects, with incremental add-ons. (Advantage: open source and SaaS, since both allow vendors to start small and grow organically);
Forty-eight percent of end customers are looking to streamline business processes, rather than endure pure cost cuts. Basically, they want to spend money more efficiently, rather than simply cutting heads;
Seventy-five percent of end customers are buying some version of managed services, but the definition of “managed services” is quite broad;
Twenty-seven percent of channel partners expect to grow their business by more than 15 percent, 40 percent expect to grow their business by 5 percent to 15 percent, and 24 percent plan no changes, suggesting that IT spending may not crater as much as expected in 2009; Partners are four times as likely to introduce new technologies, or upgrade or refresh current infrastructure to existing clients than target new customers or markets. The “new technology” is not so much a technology-driven sale (”I’ve gotta have Widget X”) so much as a solution sale (”I just opened a new office and need to expand VoIP to that office”). In other words, business partners are seeking ways to increase their value to their existing base, rather than attracting new customers, which only 6 percent indicated as a 2009 priority.
Twenty-seven percent of business partners expect to be increasingly service-oriented, while 37 percent plan a mixture of reselling (e.g., CDW/Ingram) and service orientation.
commentary
Where End Customers Plan to Spend Budget
Yet Bhagat too–along with his colleagues–said he can’t help but wonder about how the shooting relates to the stresses of the economy. He got an e-mail from a colleague in India today who had heard about the killings and wondered, “Is this the tip of the iceberg?”
Still, the incident has people saddened and worried, said Seshan Rammohan, executive director of TIE (The Indus Entrepreneurs) Silicon Valley, whose members were friends and colleagues of Agrawal’s “It’s really devastating…and very sobering,” he said. “People are very circumspect when they have to deal with layoffs and with terminations.”
Sid Agrawal’s recent Silicon India post was titled "Opportunities Galore for Semiconductors."
Initial stories widely reported that Wu had been laid off from the company, but SiPort on Saturday issued a statement clarifying that Wu was terminated and SiPort has never had any layoffs.
Bhagat, who was with Agrawal at a dinner party two Fridays ago, said his friend was cautious about he economy in general, but seemed very confident about SiPort’s position, as it recently got its chip working. With his industry experience at Adobe and Bell Labs and with two prior start-ups, Agrawal–who came emigrated to the U.S. from India in 1975–was a very “capable executive” who always “pushed the technology envelope,” Bhagat said.
Santa Clara Police spokesman Lt. Mike Sellers said the incident, especially amid the economic climate and continued layoff announcements, has triggered many questions about office security. So much so that he had planned a small press conference Monday to talk about related securities resources and programs for companies. That said, however, Sellers sees Friday’s shooting as “an isolated situation.” The victims likely didn’t suspect a problem, he said, or else they wouldn’t have agreed to meet with the suspect.
The tragedy unfolded at almost 4 p.m. PST Friday, as police officers responded to a report of multiple gunshots fired at a Santa Clara office park on Scott Boulevard in a suite occupied by SiPort, which makes digital multimedia broadcast chips for mobile markets, according to the company Web site. Dead at the scene were Agrawal of Fremont; Brian Pugh, 47, of Los Altos, who was vice president of operations; and Marilyn Lewis, 67, of San Jose, who was head of human resources.
Just a few months ago, Sid Agrawal, the chief operating officer of a 4-year-old semiconductor start-up in Santa Clara, Calif., was opining on the Silicon India site about the technology industry, noting that “green technology is the buzzword of the day” and bemoaning the challenge of “hiring good analog designers.”
(Credit: Silicon India)
On Friday, however, Agrawal, 56, became one of three victims in a fatal workplace shooting that has saddened friends, colleagues, and family members, and left Silicon Valley employees–already shook up over constant reports of layoffs and bad economic news–feeling all the more uneasy.
“The entire SiPort staff and board are in mourning,” Aiman Kabakibo, the new CEO and company founder, said in the statement. “We are a close-knit team of engineers and entrepreneurs who built this company together.”
Jing Hua Wu
(Credit:
Santa Clara County Department of Corrections)
“Silicon Valley has lost a great warrior,” said Deepak Bhagat, a close friend and fellow alumnus at the Indian Institute of Technology, Kanpur. Bhagat said Agrawal wasn’t someone who talked a lot, but what he said was “loaded with wisdom.”
The suspect, Jing Hua Wu, 47, of Mountain View, had been terminated from his position as an engineer for SiPort and reportedly asked for a meeting with his former employers to talk about his employment. He allegedly shot and killed all three victims with a handgun and fled the area in an SUV, police said. At about 10:45 a.m. Saturday, Santa Clara police arrested Wu on public road in Mountain View and booked him on three counts of homicide. His arraignment is scheduled for Wednesday morning.
“The
Xbox 360 requires additional money, multiple upgrades, and additional external devices, putting a burden on the wallet, and (it) adds clutter to the entertainment center.
It’s good to see Sony finally saying something about the competition, but this is fairly weak stuff–not all that compelling. It’s effectively saying, “don’t forget about us” instead of showing why the PS3 is a great platform.
From the release:
Edge Online reports on a Sony press release called “Keeping Gaming and Entertainment Simple,” in which the Japanese consumer electronics giant emphasizes out-of-the-box features of the game console:
“And the
Wii’s lack of enhanced features comes at the expense of a comprehensive entertainment solution.”
Blu-ray functionality Built-in Wi-Fi
Huge hard drives
Free online gaming
“Ten years of value with a future-proof system via firmware updates that offer new services and features.”
Finally, we’re seeing a bit of a fight from the Sony PR team in response to the brutal lambasting the
PlayStation 3 has been taking for its poor showing against Microsoft’s Xbox and Nintendo’s Wii, as well as the fact that it costs more to make than it sells for.
Wow. Harsh stuff! Seriously though, the PS3 is a really good gaming platform. It’s pretty bizarre that Sony hasn’t figured out a better marketing strategy over the last few months, including reducing the price to gain market momentum.
Performance comparison: transfer of 25GB HD movie (Source: Microsoft/WinHEC 2008):
USB 1.0: 9.3 hours
USB 2.0: 13.9 minutes
USB 3.0: 70 seconds
Microsoft expressed caution about USB 3.0–which is expected to offer 10 times the performance of USB 2.0–because finalization has taken so long. “Because the current USB 3.0 spec is currently not signed off, we’re challenged and we won’t have support for USB 3.0 in
Windows 7 at RTM (release to manufacturing),” Lars Giusti of Microsoft said in a WinHEC session here titled “USB Technology Update and Windows Strategy.”
(Credit:
Brooke Crothers)
He continued. “If you look at the USB 3.0 industry timelines and checkpoints, it really has been a very long, difficult and challenging three-year effort.”
LOS ANGELES–At the Windows Hardware Engineering Conference here, Microsoft talked about the future of USB 3.0 and how delays have hampered rollout of the specification.
“Our early indications tell us that most partners think that we should support USB 3.0 on at least Windows Vista.”
Giusti then made some predictions about the adoption of USB 3.0. “In 2009, the signed-off spec will be handed over to the implementers and those adopters that plan to productize USB 3.0,” he said. “Our prediction tells us that in 2010 finally we’ll see broad-scale product deployment of host controllers, devices, and systems that are USB 3.0 and SuperSpeed capable.”
Microsoft’s talk Thursday was predicated on the expected finalization of the specification later this month. On Wednesday, Jeff Ravencraft of Intel said that he expects the final specification to be announced in San Jose, Calif., on November 17. Ravencraft is also the chairman and president of the USB Implementers Forum (USB-IF) industry trade association.
“Our goal is to have the USB 3.0 specs signed off by the promoter’s group sometime later this month. Hopefully,” he said.
Click here for more news on WinHEC and Windows 7.
Currently, Microsoft is trying to figure out which operating systems will be USB 3.0-capable. “The Microsoft USB core team is currently evaluating which operating systems we should support USB 3.0 on. It’s a difficult decision and a difficult choice ’cause there’s all these moving parts,” he said.
Microsoft is wrestling with when and how to implement USB 3.0
Delays have held USB 3.0 back, Giusti said. “That makes it challenging for several reasons. Since the spec isn’t signed off we don’t see any USB 3.0 hardware in the market or even prototypes available yet. With those two disadvantages we cannot develop, create, and design support yet for USB 3.0. But we are staffing up. We are making plans,” he said.
Zuora’s funding round comes amid concerns that venture capitalists aren’t as willing to invest cash in start-ups as they were just a few months ago. But as Jason Pressman, managing director at Shasta Ventures points out, maybe that fear is unwarranted.
Zuora is competing in a crowded market. Companies like Aria Systems and eVapt are trying to corner the sector and each have been able to raise funding to do it. Regardless, Zuora has high hopes for what it can do with its business model and believes it can solidify itself as the leader in the market.
“Our vision is to build the PayPal for the subscription world, so that our customers can focus on their core business, not on their infrastructure,” said Tien Tzuo, CEO, Zuora. “The Series B round ensures that we can maintain our rate of growth and momentum and continue our quest to be the gold standard in this market.”
Zuora, a company that offers an on-demand subscription billing and payment service, announced Tuesday that it has secured $15 million in Series B funding. According to the company, the round was led by Shasta Ventures and Lehman Brothers Venture Partners. Benchmark Capital and Marc Benioff, chairman and CEO of Salesforce.com, also participated.
“Now is the time for investors to act, not sit on the sidelines and watch what happens. The venture community needs to continue to support the innovation and immense potential in Silicon Valley and elsewhere,” Pressman said.
Zuora hopes to become the “gold standard” with the help of its two main products: Z-Billing and Z-Payments. Z-Billing is designed specifically for subscription-based companies that need help managing and growing their business, while Z-Payments aims at becoming a complete payment solution that manages all elements of the payment process. With the help of the funding, Zuora claims it will release more products to supplement its current stable of solutions.