Search sites in intense competition

The New York Times reports (31 Jan.) that perhaps the fiercest competition on the internet these days is among sites offering new ways to search through more information. The paper says Yahoo and Microsoft each have hundreds of engineers trying to challenge Google's leadership, and dozens of minor players are trying to find ways of getting their services noticed.

According to the paper, A9, Amazon.com's search service, recently sent vans with digital cameras onto the streets of some cities in the US to take pictures of businesses. The photos were later displayed alongside telephone numbers in A9's phone directory.

However,the NYT says that so far, all this innovation has yet to shake Google from its perch at the top of the search market, although its growth in market share has slowed. Google, which is set to report its earnings for the fourth quarter and is expected to double its revenue from a year ago, has continued to increase its share of searches conducted over the last year, according to research by ComScore Networks. In November, 47 percent of searches in the world were on sites owned by Google, up from 44 percent a year earlier. Yahoo's sites rose to 27 percent, from 25 percent a year ago.

According to the NYT,underneath those numbers, Yahoo is making significant gains, particularly in the United States, with new features that it has yet to introduce to international users. And at a time when Google has stalled in getting some new products to the market, Yahoo has been methodically working on a master list of projects: first, core internet search, then shopping search, local search and next travel search.

In the United States, Yahoo is gaining on Google, says the NYT, with Yahoo's share rising to 35 percent of searches in November from 29 percent a year earlier, according to ComScore. During the same period, Google rose to 38 percent from 37 percent. And Yahoo is receiving acclaim for some of its innovations, like local search that allows users to see a map that pinpoints the location of the area or business they are searching for.

The NYT further reports that a study of consumer behavior by Keynote Systems showed that while Google remained the top search engine, ranked by the perceived quality of customer experience, both Yahoo and MSN were closing the gap.

Yusuf Mehdi, the Microsoft corporate vice president who manages MSN and its search effort, said he was encouraged that Yahoo's share of searches in the United States increased over the last year, and also argued that Google had lost its way.

The NYT says Microsoft's test search site (search.msn.com) has a few innovations, like the use of content from its Encarta encyclopedia and a function called "search near me" to find local listings. But industery watchers say that so far Microsoft's results did not have the quality of Google and Yahoo and were more open to manipulation by site owners.

The paper says that behind all the jockeying for position in the search engine business, however, it is still not so clear how people decide on which search engine to use. Microsoft, for example, historically has gotten a large part of its traffic because it installs MSN as the default home page for the Internet Explorer browser. And today, many search specialists say that the differences between the various search engines are much smaller than a few years ago, when Google was clearly superior to the competition.

Kodak reporedly seeking Creo for US$1 billion

Kodak is in talks to acquire Creo, a Canadian printing technology company, for about US$1 billion, executives close to the negotiations have said, reeports The New York Times (31 Jan.).

The paper says Creo is under attack from dissident shareholders who are seeking to oust its management, and the proposed deal would be the latest in a string of acquisitions by Kodak. Two years ago, Kodak set aside US$3 billion for purchases, and US$1 billion remains.

According to the NYT, other companies that have been cited as possible bidders include Fuji Photo Film, Agfa-Gevaert, Hewlett-Packard and Electronics for Imaging.

If Kodak were to acquire the company, Creo would allow it to further expand its digital printing operations, especially in Japan and China, where Creo has a significant presence, reports the paper.

SBC near deal to acquire AT&T for US$16 billion

SBC Communications is reportedly close to concluding a US$16 billion deal for its former parent, AT&T, that would lead to the virtual disappearance of one of America's best known corporate icons and set off what promises to be a new round of competition between the Baby Bells.

The New York Times reporfts (31 Jan.) that SBC's board approved the deal while AT&T executives met far into the night trying to reach an agreement. In buying AT&T, its national network and three million corporate customers, SBC can aggressively expand into the turf of its regional Bell siblings, who themselves are grappling for ways to move beyond their borders.

AT&T, the former monopoly, has been undone by cheaper internet technology, according to the NYT.,as well as growth in a cellphone industry where it has no role, and regulatory changes that squeezed it out of the local phone market.

The AT&T brand and operations are likely to survive inside SBC, which has its roots in the Southwestof the US. But it will disappear as an independent company that for generations provided reliable phone service to the masses and steady returns to shareholders, and at its height employed more than one million workers.

The NYT says that in expanding nationally, SBC hopes to create a company that largely resembles but does not equal the monopoly popularly known as Ma Bell that was broken up in 1984. The acquisition would vault SBC past Verizon Communications, which itself became America's biggest telecommunications company when Bell Atlantic bought GTE in 2000.

SBC is expected to pay $US15 billion in stock and $US1 billion in cash, an amount based on AT&T's closing price of $19.71 on Friday, reports the NYT. The new company will have combined annual sales of $US70 billion and 212,000 employees, and it could well retain the AT&T name.

The paper says that in one shot, SBC would now become the biggest long-distance carrier and the largest provider of phone and data services to corporate America. SBC also provides local phone service to more than 50 million customers in its 13 states and holds a 60 percent stake in Cingular Wireless, the country's biggest mobile phone company.

Is IBM-Lenovo deal a threat to US security?

On its face, IBM's planned sale of its personal computer business to Lenovo of China for US$1.75 billion hardly seems a deal that would prompt a national security investigation by the Bush administration, observes The New York Times in a 31 January report.

Most IBM personal computers are now produced in China, says the paper, and like other PC's, the IBM machines are powered by Intel microprocessors and are assembled with chips and parts made around the world, though mainly in East Asia.

Nevertheless, the paper reports that the Committee on Foreign Investment in the United States, a multiagency group, will carry out a formal investigation, which is expected to last 45 days.

The investigation, foreign trade specialists said, is not surprising at a time when China's stature, both economically and strategically, is in rapid ascent. It has become a manufacturing centre for the global economy, is a rising technological power and poses a challenge to the American economy on several fronts. The trade specialists tolds the NYT that the deal and the investigation are going to send an important message that these transactions will be scrutinised and that China is an important player on the world stage.

US airlines spur travel agency shift

The New York Times reports (31 January) that in a move that is expected to save US airlines millions of dollars annually, some carriers have begun to persuade travel agents to shift to web-based services from the mainframe systems they have used for 30 years.

The paper reports that earlier in January, United Airlines, which is a unit of the UAL Corporation, met with its top travel agents in Chicago to introduce them to three internet-based reservation systems from ITA Software, G2 SwitchWorks and Farelogix that rely on web connections and desktop computer technology to search and book seats. These systems cost airlines about $US1 for every ticket booked, compared with more than $10 for current booking systems.

Analysts and industry executives said all the major airlines were in similar discussions with agents, looking to book fares more cheaply, repoprts the paper.

The NYT says that although the beleaguered US airline industry has trimmed costs in almost every other area, from in-flight headsets to on-board snacks, the proprietary booking networks, run by the travel reservation companies Sabre, Worldspan and Amadeus, among others, have remained relatively unscathed. The report says that United's action signals that the airlines are willing to use the web-based systems to extract savings just as passengers use online reservation systems to circumvent travel agents.

Travel industry watchers told the NYT that "this is the first shot of a major war, and "for all these airlines, one of the objectives for the year is to move to a low-cost distribution environment."

Microsoft agrees to scrap name for new Windows

Microsoft has bowed to the European Commission's wishes by agreeing to scrap a proposed name for its second version of Windows, which is due to go on sale in Europe in February, reporets The New York Times (30 Jan.)

The NYT reports that The software giant must sell a second version of its operating system with Windows Media Player removed because the commission ruled last March that the company was abusing its dominant position in the software market, to the detriment of media player vendors like Real Networks and Apple.

The commission said that calling the second version the "reduced media edition," as Microsoft had planned, would put it at a disadvantage to the standard version of Windows.

The paper says that the two versions will be sold at the same price. Personal computers loaded with the unbundled version of Windows will be equipped with a replacement media player like Real Networks' Real One player.

A Microsoft spokesman said the company had agreed to make the change and was working together with the commission to come up with an alternative name.

Last month, the Court of First Instance, Europe's second-highest court, dismissed Microsoft's request to suspend the orders laid out in the March ruling. Microsoft sought to have them lifted until its appeal of the March ruling concluded. The appeal is likely to take a couple of years.

The commission also ordered the company to make more proprietary Windows code available to rival software makers, so that they could build server software that works as well with Windows as Microsoft's own server software. Servers connect personal computers together to form networks.

Ringtones: big business

The ring tone business - providing customised chime for mobile phones,including now,master tones, real tones, true tones, ringbacks, video tones and voice tones - is reportedly booming around the world.

The New York Times reports (30 Jan.) that an estimated $US4 billion of 30-second tones and other melodies for mobile phones was sold last year, according to Consect, the New York-based mobile consulting and analysis company that prepares Billboard's weekly chart.

The paper says that Billboard even has a top 20 ring-tones chart. A division of Lagardère, the French publisher, is pitching itself as the first record label for ring tones. Kazaa, the file-sharing network, has a dedicated Ringtone Channel.

Is there no end to the ways people can personalise their cellphones and how much they will pay for the privilege?

The NYT says the numbers are high because the price per tone is high, relatively speaking: while you can buy a CD of a dozen or so tracks for under 20 euros, or $26, and a single digital song for your computer costs 99 euro cents, a ring-tone snippet that is a small fraction of the length goes for 2 euros and up. Meanwhile, an entire song downloaded to your mobile phone only costs about 2 euros.

A few skeptics within the industry have asked whether ring tones are a fad, a bubble that will soon burst,comments the paper, but says they are in the minority and most other people say that ring tones, like text messaging by cellphone, are a lasting part of the culture.

The NYT says it is this assumption that is spurring companies like Consect to forecast an $8 billion global ring tone industry within a few years.

EDS likely ATO contract extension

The Australian Taxation Office (ATO) is leaning towards outsourcing giant EDS for a $300 million contract after describing proposals from the company, its incumbent supplier, as "encouraging", reports the Australian Financial Review (AFR 1 Feb.).

According to the paper, the ATO is deliberating on whether to extend its contract with EDS for two years until mid-2008, or to invite other suppliers to bid for the business. A final decision wil be made next month on whether to go with EDS.

The ATO business would be particularly important for EDS this year. In July, the company's whole-of-government contract with South Australia will end and the 2007 use-by-date on its $5 billion contract with CBA is looming, observes the AFR.

Banks combine to outsource cheque imaging

Plans by the major banks to outsource cheque imaging are expected to result in a contract worth as much as $US500 million - $646 million - for favoured supplier Fiserv.

The Australian Financial Review (AFR 1 February) reports that the US supplier is set to run a joint venture, Vipro, that will be established by National Australia Bank, Commonwealth Bank of Australia and Westpac.

According to the paper, the three banks expect to finalise the outsourcing contract with Fiservc this month, and in an earnings statement issued last week Fiserv revealed the contract would be run for 12 years and generate revenues of between $US400 million and $US500 million.

CIOs less money than overseas counterparts

Australia's chief information officers have little spare change to spend in new business-enhancing technologies compared with their overseas peers, an Accenture study has found.

The AustralianIT reports that Accentrure found that of an average budget of an Australian CIO, only a quarter can be classified as discretionary, wheras their overseas colleagues have about 40 per cent.

The paper says that Accenture's research into investment trends in the infrastructure space, conducted in November, will be released in the next few weeks. The study finds also that Australian CIOs are focused on achieving infrastructure best practice mainly by using web portals and enterprise integration tools. More than 65 per cent of the 75 respondents said they were either committed to, or piloting, web portals.

Merging watchdogs

The merger of Australia's communications and broadcasting watchdogs will go ahead as expected in July and the search for a chief executive for the organisation has begun, reports The AustralianIT (1 Feb.).

The paper says the Howard Goverenment wants to merge the Australian Broadcasting Authority and the Australian Communications Authority by July, proposing to call the merged organisation the Australian Communications and Media Authority (ACMA).

AAPT tech. infrastructure revamp

AAPT will introduce Windows XP across its national operations as it puts the finishing touches on a $30 million overhaul of its technology infrastructure.

The AustralianIT reports (1 Feb.) that AAPT will integrate the hodgepodge of information systems it has inherited through acquisitions with those of its parent company, Telecom New Zealand.

The paper says AAPT will spend $8 million on the crowning component of the project, a 2400-seat Windows XP roll-out across the group's national operations. The report says the roll-out, which began in November, will establish a common operating environment in the telecommunications group and allow executives to roam between the group's AAPT and Telecom New Zealand offices.

Government back fibre-optic service for housing

The Victorian Government has backed the rollout of residential fibre-optic services in Melbourne as telecommunications carriers continue to baulk at the cost of connecting homes to their fibre networks, reports The Australian Financial Review (AFR 1 Feb.).

The AFR says the move is aimed at encouraging the installation of the fibre-optic services in new housing developments across Victoria in an effort to improve residential access to broadband internet services.

Under the program, the Victorian government has backed plans to install fibre-optic cabling at the Aurora housing estate in the Melbourne suburb of North Epping, and a tender for the project is scheduled to be released today, reports the AFR.