The Morning Download: Apple-Samsung Ruling Could Have Big Impact

[Steve Rosenbush]

The Morning Download comes from the editors of CIO Journal and cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints. You can get The Morning Download emailed to you each weekday morning by clicking here

Good morning. The latest twist in the patent war between Apple Inc. and Samsung Electronics Co. is a reminder of just how quickly things can change in the world of technology, where today’s seemingly unassailable market leader can suddenly find itself on the defensive. And it also underscores how government policy, court decisions and regulatory rulings can play a larger role in technology than technology itself.

Samsung won a huge legal victory against Apple that threatens to stop the sale of some iPhones and iPads in the U.S., the WSJ reports. The U.S. International Trade Commission ruled that Apple violated a Samsung patent covering technology used to send information over wireless networks. Unless vetoed by President Obama or blocked by an appeals court, the ruling will bar the importation of certain iPhones and iPads made to work on ATT Inc.’s network. Among them are the iPhone 4, the iPhone 3GS, the iPad 3G, the iPad 2 3G and the iPad 3. The ITC’s decision against Apple was largely unexpected, particularly because the initial review by a judge at the agency had found Apple’s products weren’t infringing Samsung’s patents.

Lyle Vander Schaaf, an intellectual property lawyer at Brinks Hofer Gilson Lione, told the WSJ that it is rare for federal appeals courts to delay exclusion orders during appeals, and that presidential vetoes are even rarer. “On first blush,” he said, “this seems like a really impactful decision.”

What Salesforce’s ExactTarget deal means for CIOs (even more on that below). The high premiums built into Saleforce.com Inc. $2.5 billion acquisition of ExactTarget Inc. and International Business Machine Corp.’s $2 billion purchase of SoftLayer Technologies Inc. illustrate the growing importance of cloud services. In fact, much of the proliferation of corporate cloud applications has occurred without the knowledge or blessing of CIOs. But that doesn’t absolve CIOs from the responsibility of securing corporate and customer data. Rebecca Wettemann, vice president of Nucleus Research, says the Salesforce deal could ultimately make it easier for CIOs to manage SAAS applications sold directly to the business. “For the smart CIO, this is an opportunity to show how they can take advantage of the overall Salesforce platform to deliver value across the business,” she told CIO Journal.

If CIOs don’t like the way that Salesforce.com’s acquisition of ExactTarget turns out for them, the vendor’s cloud-based business model will make it relatively easy for them to find an alternative. One ExactTarget customer, Kathy Doyle Thomas, executive vice president of book-store chain Half Price Books, Records, Magazines Inc., tells CIO Journal that she has no qualms about packing up and switching to another vendor should services decline. ”If they changed their practices, we would have to reexamine [our relationship] and send it out for bid,” she said. Denis Pombriant, analyst with Beagle Research LLC, said modern software programming tools let customers easily shuttle their data to vendors’ software and servers. Once in the cloud, CIOs often don’t need to buy multiyear licenses and maintain servers. “The CIO — the customers — have more power today than they’ve ever had before,” Mr. Pombriant said.

NASA looks to consumer tech to help cut costs. NASA is turning toward the iPhone to help it “discover new worlds” in the age of budget cuts. In one project operators are using an iPhone from Apple Inc. to field test a cargo-hauling robot. Speaking at the CITE technology conference in San Francisco, attended by CIO Journal, Tom Soderstrom, IT chief technology officer at NASA’s Jet Propulsion Laboratory, described the consumer technology experimentation  as part of his efforts to instill the idea that in IT, it’s OK to fail in the early stages of evaluating a technology.

TECHNOLOGY NEWS

Tech firms back Obama patent move. Technology companies are welcoming the Obama administration’s decision to wade into the debate over patent litigation, seeing a chance to stem a flood of lawsuits they say is hurting innovation, the WSJ’s Ashby Jones writes. The administration was swayed by a vigorous lobbying effort involving a number of industries, including the technology, financial and retail sectors. “We learned that some of the nation’s most well-recognized companies have spent more money defending patent lawsuits than they have on RD,” said a senior administration official. The patent firms “are hurting economic growth and distracting greater innovators from innovating.”

Viacom, Amazon reach deal on streaming TV shows. Amazon.com Inc. reached a deal with Viacom Inc. to stream “Dora the Explorer” and other TV shows. The switch comes just days after Viacom’s licensing agreement with Netflix Inc. expired, report the WSJ’s Amol Sharma and Greg Bensinger. Viacom’s deal with Amazon shows how media companies are trying to adapt to the shifting dynamics of the online video world. Digital licensing is a fast-growing source of revenue for Viacom and other content owners, but the negotiation dance has become more complicated.

HTC operations chief steps down amid phone delays. HTC Corp. Chief Operating Officer Matthew Costello stepped down after less than three years at Taiwan’s biggest smartphone maker amid slumping sales that have pushed down its shares about 75% in the past two years. Fred Liu, who is president of engineering and operations, took on Costello’s responsibilities in an expanded role covering operations, quality, sales operations and services, Bloomberg’s Tim Culpan and Cindy Wang report.

China has ‘mountains of data’ about U.S. cyberattacks, official says. China’s top Internet security official, Huang Chengqing, says he has “mountains of data” pointing to extensive U.S. hacking aimed at China, but called for greater cooperation to fight hacking, Reuters reports. Cybersecurity is expected to be at the top of the agenda when President Barack Obama meets with Chinese President Xi Jinping in California on Thursday and Friday. Mr. Obama is expected to tell Mr. Xi that Washington considers Beijing responsible for any cyberattacks launched from Chinese soil and must take action to curb high-tech spying.

RNC hires Facebook manager as CTO. The Republican National Committee has hired a Facebook Inc. engineering manager as its new chief technology officer, the Hill’s Kyle Balluck reports. “Pleased to announce we have hired Andy Barkett as the RNC’s CTO,” RNC Chairman Reince Priebus tweeted. The RNC has said it wanted to hire a chief technology and digital officer by May 1 who would be responsible for recruiting a team of data scientists, tech and digital advocates that would build a new data and digital operation.

Salesforce to buy ExactTarget for $2.5 billion. Salesforce.com agreed to buy ExactTarget in a cash deal valued around $2.5 billion, expanding the business-software company’s marketing portfolio through its biggest acquisition yet, report the WSJ’s Drew Fitzgerald and Ben Fox Rubin. ExactTarget makes software that helps companies run and measure marketing campaigns across email, mobile devices, social networks and websites. Michael Lazerow, CMO of the Salesforce Marketing Cloud, tells Ad Age’s Kate Kaye that integrating ExactTarget’s platform with Saleforce’s various social platforms, such as social-advertising technology Social.com, will not be an issue. “I just went through this with Buddy Media,” he said, referring to the social-publishing platform Salesforce.com acquired last year. There are no plans to create one big technology stack, he said. Instead, integration will be more piecemeal based on client needs.

Data compiled by Bloomberg indicate that Salesforce’s purchase may be the biggest e-marketing takeover since 2008, when Google Inc. completed its acquisition of DoubleClick Inc.

IBM to buy cloud-computing firm SoftLayer. IBM agreed to buy privately held SoftLayer Technologies in a $2 billion deal aimed at beefing up the company’s efforts in cloud computing. The acquisition could help IBM compete more aggressively for the low end of the market against Amazon, which has a dominating position with small and midsize businesses in the cloud-computing market, reports the WSJ’s Spencer Ante. As part of the deal, IBM is creating a cloud-services division within its Global Services group to house SoftLayer as a stand-alone company and pull together its other cloud-computing services. GigaOm’s Barb Darrow calls the deal necessary to shore up IBM’s public cloud,  ”a melange of IBM hardware, software and services that others might not really consider ‘cloud’ at all.” She continues: “IBM is a big, important company, but its ability to turn out innovative  stuff has been constrained by a hairball of legacy technologies. The question now is whether it will take what is good about SoftLayer and infuse that into the rest of the IBM cloud (one hopes!) or muddies what is great about SoftLayer.”

Intel to invest $100 million in voice, gesture technologies. Intel Capital, the global investment arm of chip maker Intel Corp., is setting up a $100 million fund to invest in “perceptual” computing technologies like voice and gesture control, reports the WSJ’s Eva Dou. The fund will invest over the next two to three years in firms making software and applications with functions like imaging, gesture and voice control, emotion sensing and biometrics, the company said.

Canadian business software company goes shopping. Waterloo, Ontario-based Open Text Corp. has been on an acquisition spree, spending $750 million in 2011 and 2012 on five acquisitions. Open Text makes corporate-efficiency software. Bloomberg’s Hugo Miller credits CEO Mark Barrenechea‘s 15 years in Silicon Valley, including the six years he spent reporting to Oracle Corp.’s Larry Ellison, as instrumental to forming his shopping bug.

Windows 8 is failing to beat older Windows platforms. NetMarketshare reports that Windows 8 is the fourth-most popular operating system, behind Windows 7, Windows XP and Windows Vista. Given Windows 8′s “dismal performance,” ReadWrite’s Brian Proffitt wonders if blame rests on the software itself, or just the lack of demand. Gmail and social networks such as Facebook have played a role in disrupting the software cycle, he opines. And feature saturation, especially in office suites, may give users pause for an OS update. “Given such a situation,” he writes, “Windows 8 may have really never stood a chance for massive blockbuster release numbers. The market is too crowded with, ironically, other Windows installs that are doing the jobs they need to do well enough.”

Dell trim’s CEO’s pay. Dell Inc. cut CEO Michael Dell‘s pay by 14% last year after the company posted declining sales, reports Bloomberg’s Aaron Ricadela. Mr. Dell received total compensation of $13.9 million for the fiscal year ending Feb. 1. For the previous period he received $16.1 million. The company will meet with shareholders on July 18 to vote on a leveraged buyout to take the PC maker private.

Verizon Wireless pads NFL deal. Verizon Wireless will pay $1 billion for rights to air more NFL games over its customers’ smartphones, betting big on changing viewer habits as Americans watch more of their favorite shows on screens other than TV, the WSJ reports. The deal represents a significant extension of the league’s embrace of mobile-video technology as it breaks from the exclusivity it long gave broadcast-, cable- and satellite-television partners.

France wants to break out of its technological ‘Death Valley.’ The European Union’s largest producer of math, science and technology graduates needs to get out of “the death valley between what’s developed in a lab and its future as a successful product or company,” Louis Gallois, former head of Airbus parent European Aeronautic Defence and Space Co. and now France’s competitiveness czar, says in a Bloomberg story. Building on a decade-long effort, President Francois Hollande’s government is seeking to put in place plans to squeeze more out of the country’s innovations and image, Bloomberg reports. The latest effort to end Europe’s second-largest economy’s recession and reverse record joblessness is a state-commissioned report dubbed “Brand France” that will lay out by the end of June ways to wring more from the nation’s research, patents and other intangible assets, Bloomberg says.

EVERYTHING ELSE YOU NEED TO KNOW

Pandora CFO downplays Apple ‘iRadio’ rumblings. Pandora‘s stock has been sliding on talk that Apple is getting closer to launching a rival music-streaming service and has deals in place with two major labels. But CFO Mike Herring says he isn’t worried about iRadio, the Los Angeles Times reports. Mr. Herring played down the speculation, noting no announcements have been made and nothing has been officially launched. “We’re waiting, like the rest of you, to find out what they’re going to do,” he told a technology conference in San Francisco.

Comcast CFO upbeat on NBC, Telemundo. Comcast CFO Michael Angelakis says his company remains “very optimistic” about the financial upside of NBCUniversal, including from ratings and retransmission consent-fee revenue at NBC and Spanish-language arm Telemundo. Speaking at a conference in London, Mr. Angelakis argued that NBC has “real upside” as it has “underperformed substantially for a number of years,” according to the Hollywood Reporter. He also said that Telemundo currently doesn’t have “very material profitability,” but there’s opportunity to boost operating cash flow via ratings gains and advertising growth.

Glass Lewis urges Sprint shareholders to abstain. Glass Lewis urged Sprint Nextel shareholders to abstain from voting on the wireless operator’s $20.1 billion acquisition by Japan’s SoftBank, the WSJ reports. The advisory firm said shareholders should hold off until Sprint’s board makes clear its view of a rival $25.5 billion takeover proposal from Dish Network. The recommendation comes days after ISS urged shareholders to support the SoftBank takeover, while withholding judgment on whether the Dish proposal is superior.

Et tu, A-Rod? Major League Baseball will seek to suspend about 20 players connected to the Miami-area clinic at the heart of an ongoing performance-enhancing drug scandal, including Alex Rodriguez and Ryan Braun, possibly within the next few weeks, ESPN’s “Outside the Lines” reports. If the suspensions are upheld, the performance-enhancing drug scandal would be the largest in American sports history, the sports news site says. Tony Bosch, founder of now-closed Biogenesis of America, reached an agreement this week to cooperate with MLB’s investigation, “Outside the Lines,” giving MLB the ammunition officials believe they need to suspend the players, Outside the Lines said, citing two sources.

Tom Loftus contributed to this article.

Article source: http://blogs.wsj.com/cio/2013/06/05/the-morning-download-apple-samsung-ruling-could-have-big-impact/

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