iPhone5 launch near?

Looks like we should expect it to be out by mid September. Rumor mill is really hot for it.. Lot of speculations as always.. 4 inch is most prominent with 16:9 ratio screen.. Real 4G.. better chip set.. you name it.. everything is there in iPhone5 ;-)

Let me also do my part by fueling it further..

RUMOR MILL

iPhone 5: What it looks like, when it’s coming out

By Patrick May

pmay@mercurynews.com 

Once again turning rumor mongering about the widely expected iPhone 5 into a fine art, Apple fans at two different websites Monday released a couple of juicy tidbits for the salivating masses: Japanese site iLab featured a series of photographs of what it claims is the next iPhone after it got its hands on allegedly leaked iPhone parts and then assembled them.

Meanwhile the techies over at iMore website, which apparently has been pretty good with Apple-related predictions in the past, said the Cupertinobased tech giant will hold an event Sept. 12 to announce the new iPhone.

Apple, as usual, declined to comment.
Contact Patrick May at 408-920-5689 or follow him at Twitter.com/patmaymerc 

Infrastructure of India Inc.

It really saddens me with the news like this from India. It is still amazing.. Such a great nation with such a great progress in recent decades and here we are.. as if living in stone age. Come on.. enough is enough.. we have to fix this infrastructure issue. In particular, power, water, sanitation and road. Roads have improved a lot.. but Power and Water is still big time issue. There is no excuse of some states doing better and some states worse.. The state from which I come from.. UP (Uttar Pradesh) is one of most populous state of India I think even after splitting it. Power situation is so bad.. for whatever reasons.. though mostly political, corruption and total mis-management.. Despite the fact that this state has lot more power generation capacity.. but this state's utilities (mostly Government Organization) simply doesn't have capability to buy power from these Power Producers as they simply can't recover money from customers. It is that simple to the core of it..

Despite significant progress in so many areas of IT/Shopping/Cars/Transportation/etc.. basic infrastructure is still missing.. Why can't government simply fix it.. One simple reason I can think off is these so called social programs.. I don't know if we still have those so called "Garebi Hatao" programs... they didn't remove any poverty.. they simply made politicians and bureaucrats stinking rich.. I think, now the campaign from middle class should be to educate and make these poor people aware of simple facts that there is no free money and these kind of programs are not going to benefit them. They will simply keep them poor.. Instead of this, government should channel all the money into infrastructure like power, water, roads.. and leave rest of the areas to private sector.. This will automatically fix problems and hopefully progress will percolate to these poor people.. Or even, let these infrastructure projects should be taken care by private sector.. simply put, public sector can only breed corruption..

Another very important change which India needs is in their bureaucratic system.. They simply need to abolish this Civil Services organization.. It was designed to serve Britishers to rule easily.. its purpose was served when we got independence.. It should have been abolished at that time.. but better late than never.. I know.. it is easier to write and scream about it.. but difficult to change.. However, I am sure with power of internet, it can be done.. I am hopeful that it will be done sooner or later.. without that, India will remain in shackles of these politicians and Civil Servants.. There has to be accountability at each level.. Why we need District Magistrate, who is coming from outside to manage district's (or County's) affairs.. Why can't we have District/County supervisors who are elected by the people.. once there are multiple democratically elected positions, it should hopefully make politics as career of choice for many more young people. Obviously, we need restrictions on number of terms any particular position can be held by any individual..

I think I digressed from my main topic of Infrastructure to political systems.. But in reality they are both very closely linked.. it will be difficult to have any real progress without fixing both of them..

Power supply restored in 70 % parts of north India

New Delhi, July 31, 2012, (PTI) :

Electricity supply has been restored in close to three-fourth of the areas in the northern region, including the national capital, that were severely impacted by power outages since today afternoon.

Seventy per cent or 24,300 MW of power has been restored in the northern region, including Delhi, till 1930 hours, Power Grid said in a statement.

In Delhi, 100 per cent or 4,100 MW, has resumed.

State-run Power Grid, which manages grids across the country, said that "supply to (Delhi) Metro and Railway traction (was) restored at 1530 hours".

Power Grid said full electricity supply has been restored in the North East.

In the Eastern region, 50 per cent supply has been restored till 2030 hours.

Triggering a major power crisis, the three major grids -- Northern, Eastern and North Eastern -- failed at 1300 hours.

Even though the exact reason is yet to be ascertained, officials said that problems started in the Eastern Grid and there could also have been over drawals by some states.

Is this going to be part of iPhone5?

Seems interesting technology.. though nothing new as we have seen it in many laptops and some Android phones.. I am sure Apple will come up with something much more beyond than security aspect of it.. This article mentions about mobile payment.. which is going to be another big round of new technology wars in mobile space.

Question is.. will it be part of iPhone 5 already or it will take some time for them to integrate it. I am sure they must be working on it for some time and must already have some kind of OEM deal already.. if they are going to use in iPhone5.. otherwise we will have to wait for iPhone 5S or something like that to see this in effect.

However, Samsung will have to find another partner to provide this service.. and also get ready to be hit by Apple's patent suit in this area. I am sure Authen-Tec must have some interesting patents in fingerprinting security area..

$356 MILLION DEAL

Apple buying fingerprint sensor maker

Purchase of AuthenTec may help bring mobile pay market to the U.S.

By Sinead Carew and Himank Sharma

Reuters

Apple will buy fingerprint sensor technology developer Authen-Tec for about $356 million, in a deal that could put its iPhone at the center of the emerging mobile payments market.

Apple is paying $8 a share, a 58 percent premium, for Melbourne, Fla.-based AuthenTec, which counts South Korean mobile device maker Samsung Electronics among its big customers.

AuthenTec — which makes fingerprint sensor chips used in personal computers and mobile devices — is one of the very few public companies that has been acquired by Apple, a company that rarely does acquisitions and tends to buy mostly startups when looking for cutting-edge technology.

Shares of AuthenTec surged $3.35, or 66 percent, to $8.42 on Nasdaq in Friday’s trading. Apple stock was up $10.28 at $585.16.

AuthenTec, which was spun off from Harris Semiconductor in 1998 and went public in 2007, provides mobile security software licenses to companies like Samsung, and fingerprint sensor technology to computer makers such as Hewlett-Packard and Dell.

Its fingerprint technology, which is also used in mobile phones in Japan for authentication of mobile payments, could help Apple bring those services to markets such as the United States, where mobile wallet services have been slow to catch on.

Some analysts expect the next version of the iPhone to include some form of mobile payments technology. 

An Apple spokesman declined to comment on how Apple plans to use Authen-Tec’s technology. 

While companies such as Google already have mobile payments offerings, such services are not widely used in the United States and have been dogged by security concerns. 

“To have security behind it would give people peace of mind. It could be a major differentiator for them,” said Dougherty & Co. analyst Charlie Anderson, who noted that fingerprints are more secure than passwords because they cannot be copied or stolen. Anderson said Apple was buying a rich portfolio of patents from AuthenTec that could help it dominate mobile payments. 

Mobile wallet users will want to be sure their money is safe and would like something more secure and easier to use than passwords that have to be typed in, analysts said. 

“If you’re storing credit card information in your phone for mobile payments, it would be more secure if it has fingerprint authentication rather than just a password protection,” BWS Financial analyst Khorsand Hamed said. 

Anderson said Apple may continue to offer Authen-Tec’s existing products to its rivals to help gain regulatory approval but it may keep future developments for its own products. 

BGC Partners analyst Colin Gillis said AuthenTec technology could potentially help Apple combat problems such as theft of its more portable products such as iPhones. 

“If they could have a way where they could tie the phone to a user more tightly, that would make sense for them,” he said. 

He described the price tag for AuthenTec as a drop in the bucket of Apple’s cash pile of $117.2 billion, and noted the company had not been as acquisitive as some other technology businesses. 

“We’ll see if it’s a one-off or if Tim Cook will start to level his cash balance and acquire talent,” Gillis said, referring to Apple’s chief executive. 

AuthenTec, which also counts Lenovo and Fujitsu as customers, has annual revenue of about $70 million. 

I think investors are over-reacting on FB stock

I think investors are way too much over reacting on this. This concept of watching quarterly results every quarter will eventually hurt them only.. at least in this case.. or may be benefit them by letting them buy FB dirt cheap now..

You have to understand one thing, Facebook controls biggest and most significant and most strategic information about consumers. There is no denying about it. Even Google or any other company doesn't have that detailed and accurate information about customers. FB just needs to figure out how and where to use this power properly without annoying there very customer as well sourcing base of this immense wealth. Nobody can do better or more accurate advertising than FB.  However, they have not been able to do it properly or I should say, show it off to investors. FB's privacy policies are always in news.. Let us see what they come up with now.. Pressure is high, my hope is that they won't try to squeeze their user base with something totally ridiculous policy change or something like that.

Having said that, I don't know the fact that how much of it is already analysts have taken into account. In my view, FB pricing was based on this fact only, but subsequently they were not able to keep this idea in brains of analysts and investors.

All this Zynga fallout etc.. is non-sense. It was a very small piece of the pie for FB any how. In long term, this Zynga shinga is not going to matter for FB. This will definitely matter in Quarter to Quarter earnings and that is one reason, I really don't like them and definitely won't react much to them. They do indicate your operational health but that is very very tactical and unless totally botched, they are not going to impact long term growth of the company.

Final disclaimer, I don't have FB stock neither do I have any plans to acquire or short them in any short/medium term.

COMPANY HURT BY EARNINGS, ZYNGA FALLOUT

Investors pummel Facebook

Social media giant’s bad week ends with 12 percent drop in stock

By Brandon Bailey

bbailey@mercurynews.com 

MENLO PARK — Facebook continued taking a pounding on Wall Street Friday, as its stock price hit a new low, wiping out billions in shareholder value after a week of bad news for the social networking giant.

Facebook’s market value is now close to half the record $104 billion valuation that the company set when it began selling shares in May. Other social media companies are also struggling, despite early excitement over what was expected to be a new “hot” industry. Zynga, Pandora and Groupon are all trading far below their initial public offering price.

Shares in Facebook fell 12 percent on Friday, closing at $23.70, after heavy trading in the wake of an earnings report Thursday that showed the company’s revenue growth is slowing. While some Wall Street analysts stood by their earlier conclusions that Facebook has significant earnings potential, they said investors are worried about rising operating costs and the company’s unwillingness to predict future revenue.

“We acknowledge that it is difficult to determine the true value of Facebook,” Wedbush Securities analyst Michael Pachter wrote in a note to investors Friday. Although he said he expects Facebook’s business to grow, Pachter said this week’s earnings report, coming after the company’s “messy” stock market debut in May, “will likely keep some investors away from the stock.” 

Adding to investor worries is the bombshell dropped Wednesday by Zynga, the online gaming company whose business is closely tied to Facebook. Zynga’s stock fell nearly 40 percent over two days, closing Friday at $3.09, after the company reported earnings far short of estimates and lowered its forecast for the year. 

Facebook executives did not speak directly about Zynga’s troubles during a conference call Thursday, but they reported that Facebook saw virtually no growth over the past three quarters in its revenue from fees for processing online payments. 

Zynga’s games are a major source of those Facebook fees, although Facebook recently introduced a new online “App Center” that’s expected to help diversify its revenue base by helping users find games and apps from other developers besides Zynga. 

Analysts generally gave good marks to Facebook CEO Mark Zuckerberg for his presentation during the company’s conference call Thursday. The 29-year-old company co-founder answered questions and outlined the company’s strategy for increasing revenue by developing new forms of mobile advertising and by serving as a platform for other companies to base a variety of online businesses. But as Facebook seeks to build its own business, the company is increasing its spending on hiring, marketing, research and facilities. That drove the company’s operating margin, a measure of profitability, down to 43 percent from 53 percent a year ago. 

Chief Financial Officer David Ebersman reported the company has grown from 3,200 employees to nearly 4,000 in the past six months. “At this early stage of our growth,” he told analysts, the company is focused on “investment” to expand rather than on managing its costs. 

Ebersman declined to give a revenue forecast for future quarters, but he warned analysts that spending will grow even more in the second half of 2012. That worries many investors, according to Macquarie Securities analyst Ben Schachter, who blamed “a general unease about revenue visibility” among reasons for the plunging stock price. 

Also in the back of shareholders’ minds, Schachter said in a research note, is the looming expiration of a regulatory “lockup period” that barred employees and early investors from selling stock. If enough of those shares go on the market next month, that could drive the price down further. 

The value of Facebook shares has fallen 38 percent since the company’s initial public offering, when the stock was priced at $38. Estimates of the company’s total market value vary according to the number of shares used to calculate the value. 

As the company’s biggest shareholder, Zuckerberg saw the value of his holdings drop more than $2.8 billion in the past two days, although his 503.6 million shares are still worth nearly $12 billion. 

Analysts who are bullish about Facebook said its falling stock price represents a buying opportunity for new investors. Needham’s Laura Martin argued in a report Friday that Facebook has enormous potential to increase its revenue from advertising and e-commerce — in part because the social network is heavily used by women, who Martin said have more influence over consumer purchasing than men. 

But analyst Trip Chowdhry of Global Equities Research, who has consistently criticized Facebook for setting its IPO price too high, advised investors to “remain on the sidelines for now.” 

Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/ BrandonBailey. 

Another US jobs safe heaven going down?

I thought that this was happening long time back. I don't think this is new. However, interesting thing is how they are blaming new Obama care for acceleration in this area.. Apparently, as per new law insurers have to limit administrative costs below certain percentage of overall healthcare costs. Which makes sense.. but there is administrative work.. somehow it has to be done.. there is no magic into it.. unless you think outsourcing it to cheaper places.

I was thinking that this are was pretty much safe for US due to data privacy laws, but I am sure these guys must have figured out way to keep patient data safe some how ;-) For that matter, that data isn't that safe even in US. Actually, it could be more safer as they implement these outsourcing processes..

As long as I keep on getting better and cheaper care I don't mind whom I am talking to or who is giving me that care. Let the Capitalism take care of it. It is another lesson for US, to pour in more money into science and maths education and making college education more cheaper and affordable. Somehow, the scare against science and maths needs to go away from kids.. Despite one of the best education system, kids are not able to take advantage of it and many kids still drop out after high school to pick up basic service jobs. Currently there are plenty of jobs and it seems that for a young person they can make good enough money for that person to survive. However, these type of basic admin and service jobs will continue to get reduced.. Young kids and generation has to move into better high intellectual jobs. They better understand now vs.. when it will be too late..

Whatever, they are talking about getting manufacturing jobs back in US is just minor aberration at the best.. First of all, they are very few.. second, they are coming back only when there is no unions or essentially salaries are really very low as compared to what used to be. Capitalism will find its way to save money and generate more efficiencies and productivities. It is up to you how you benefit out of this capitalist system..


Big shift in health care jobs overseas

Many companies outsourcing work to Philippines, India

By Don Lee

Los Angeles Times

WASHINGTON — After years of shipping data-processing, accounting and other back-office work abroad, some health care companies are starting to shift clinical services and decision-making on medical care overseas, primarily to India and the Philippines. Some of the jobs being sent abroad include so-called pre-service nursing, where nurses at insurance firms, for example, help assess patient needs and determine treatment methods.

Outsourcing such tasks goes beyond earlier steps by health care firms to farm out reading of X-rays and other diagnostic tests to health professionals overseas. Those previous efforts were often done out of necessity, to meet overnight demands, for instance.

But the latest outsourcing, which have contributed to the loss of hundreds of domestic health jobs, is done for financial reasons. And the outsourcing of nursing functions, in particular, may be the most novel — and possibly the most risky — of the jobs being shifted. At the forefront of the trend is WellPoint, one of the nation’s largest health insurers and owner of Anthem Blue Cross, California’s biggest for-profit medical insurer.

In 2010, WellPoint formed a separate business unit, Radiant Services, aimed at advancing outsourcing and other cost-saving strategies. WellPoint has eliminated hundreds of jobs in the U.S. over the past 18 months as it has moved jobs overseas, a company spokeswoman acknowledged.

The spokeswoman, Kristin Binns, said WellPoint’s shifting of clinical jobs overseas was a small part of the outsourcing and being done through Radiant because it has the technical expertise and can ensure compliancewith laws. Nursing organizations, however, were cautious. “It’s obviously a very disturbing trend,” said Chuck Idelson, a spokesman for the California Nurses Association. “There are serious questions if you’re talking about utilization reviews ... and making recommendations on procedures.” Nursing experts said there also may be licensing issues as states generally require certification for those practicing and dispensing health information. 

Current and former Radiant executives declined to comment or weren’t available. It’s not clear how many other U.S. health care firms have contracted with Radiant or other outsourcing specialists, but industry experts said companies were increasingly looking at more health care tasks that could be outsourced globally as they face greater cost pressures and sweeping changes in how they do business. Aetna has an arrangement with EXL Service, a U.S.-based company with operations in Manila, to provide “targeted caremanagement support,” spokeswoman Cynthia Michener said. Health Net, which is laying off dozens of information technology and accounting workers whose jobs are being sent to India, said its outsourcing has generally been confined to administrative and IT functions. UnitedHealth Group, the nation’s largest health insurer, didn’t respond to inquiries. Outsourcing jobs out of the country has become a hot issue in the presidential campaign: President Obama is pounding Republican challenger Mitt Romney for his private equity firm’s involvement with companies that sent jobs abroad. Although such outsourcing has been going on for years, American manufacturers in recent years have brought some jobs back to the U.S. as labor costs have risen in China and elsewhere. 

Some experts argued that sending jobs abroad could help U.S. companies by enabling them to tap global talent and efficiencies, making them more profitable. When U.S. companies are stronger, the thinking goes, it creates more opportunities for American workers. Also, shifting operations to lower-wage countries can help consumers by holding down prices. 

Labor costs 

Outsourcing jobs to places such as the Philippines can save U.S. health care firms 30 percent in labor costs, according to experts. But the practice remains controversial, especially with the U.S. unemployment rate hovering above 8 percent. Patient advocates worry about crucial decisions involving a patient’s care being in the hands of foreign insurance adjusters. Analysts said there was another concern as well: patient privacy. Even something as straightforward as medical transcription can raise questions, said Uwe Reinhardt, a health care economist at Princeton University. Over the last year, Iowa Health System and hospitals in Utah and Washington state have joined other medical centers that have outsourced the transcribing of doctors’ notes and other records. 

“Suppose I’m an AIDS patient,” Reinhardt said. “That person in India would know — and ‘the information’ could be valuable to someone. ... For the U.S., there’s nothing more personal than health care.” Dr. Kaveh Safavi, head of the North American health practice for Accenture, a major consulting and outsourcing firm that has partnered with Well-Point’s Radiant, said nearly all countries have laws for protecting patient privacy. 

And to safeguard patients’ records, he said, health care companies store and maintain their records locally. 

As for outsourcing services that are more clinical in nature, he said, “People are looking at all the tasks that can safely and responsibly be moved. It’s still an emerging market. We’re still trying to understand the market’s tolerance for it.” 

In general, hospitals are moving more slowly than health insurers to send jobs overseas. But with financial pressures intensifying and the uptake of electronic record- keeping accelerating, analysts and industry people see more consolidation and outsourcing ahead. 

Virtual call center 

“Whenyouhavepeople’s medical, billing and other records kept electronically, then it opens it up to establishing a call center virtually anywhere,” said Steve Trossman, a Los Angeles spokesman for the Service Employees International Union, which represents hospital workers. “There is no longer a reason for it to be physically in the same place as the paper records.” 

Moreover, the health care reform law could prod insurers to move more jobs to cheaper-wage countries. The new law requires companies to spend 80 percent to 85 percent of premiums on medical care, limiting the amount available for administrative expenses. 

Few have been as aggressive as WellPoint, which made a profit of $2.65 billion last year on revenue of $60.7 billion. WellPoint’s total employment at the end of last year was 37,700, down from 40,500 two years earlier. 

In one of its recent efforts, WellPoint laid off pre-service nurses in Colorado and Nevada so the work could be done in Manila, according to a Labor Department filing by a WellPoint human resource manager in Denver. Well-Point spokeswoman Binns said none of the decisions that involve denial of procedures or treatment for patients are made overseas. 

Overall, Binns said, fewer than 2.5 percent of the 37,000 employees, or at most 925 workers, had lost jobs in the last 18 months as a result of work sent overseas. Only about 50 of those positions involved clinical management of care, she said. 

WellPoint’s “sourcing strategies have enabled us to make our services more effective, accessible and affordable to our customers, while allowing us to expand our programs and maintain our service levels,” she said. 

Shannon Cunningham of Columbus, Ohio, who processed medical claims for WellPoint, was laid off last month after a colleague went to the Philippines to train people to do her job. 

Cunningham, 43, said she received eight weeks of severance pay. She and others working in medical claims earned $30,000 to $40,000 a year with health benefits, she said. 

“I know other countries need work,” said Cunningham, a company employee for three years. But “I just felt like it wasn’t fair. We’re having a rough time too.” 




MICHAEL J. DOOLITTLE/BLOOMBERG NEWS 

Health insurer Aetna has a deal with EXL Service, a U.S.-based company with operations in Manila, to provide “targeted care-management support.” 

Again.. We need Gigi Ethernet just like phone in every house..

This is great news.. Kudos to Google for taking this initiative.. I hope it is successful and results in eye opener for US government. It has to be done.. sooner or later.. better we do it sooner and realize this potential..

It will be really interesting to watch the use cases coming out of this. Let us see, how city and its residents and hopefully young enterprising companies come up with to utilize this blazing fast internet pipe. Definitely most advantage will be in pervasive video applications and related areas. Off course Kansas City will be limited by non availability of Gigi internet on other side. But thye can definitely set up streaming services to take advantage of great upload service. Local LAN based applications will also be worth watching. With this speed, entire Kansas City should only have high def video phones or even 3D Halo type of video connectivity instead of POT (Plain Old Telephone) service.

Gaming industry should come up with more intuitive 3D type of Games where they can project other side as a Halo so you can really feel that you are playing with each other instead of playing with TV/LCD Display. I am sure, it is still early.. but once more and more Kansas Cities start coming up they will be come reality.


Cheers!!!

KANSAS CITY WIRED FOR SPEED

Google puts $70 price on ultrafast Net service

Firm installed optical fiber to create test bed for tech


By Maria Fisher and Peter Svensson

Associated Press

KANSAS CITY, Mo. — Google revealed Thursday what it will charge for its long-awaited, ultrafast Internet service in Kansas City: $70 a month.

The service is intended as a showcase for what’s technically possible and as a test bed for the development of new ways to use the Internet. Bypassing the local cable and phone companies, Mountain View-based Google has spent months and an unknown amount of money pulling its own optical fiber through the two-state Kansas City region.

After vetting many contenders, Google announced last year that the Kansas City metro area would be the first to get its Fiber for Communities broadband service.

Some cities had used gimmicks to get the company’s attention. Topeka informally renamed itself “Google, Kansas.” A group in Baltimore launched a website that used Google’s mapping service to plot the location of more than 1,000 residents and give their reasons for wanting the service. Hundreds of groups on Facebook implored Google to come to their cities. The $70 monthly fee will pay for “gigabit” Internet service, about 100 times faster than a basic cable modem. For an additional $50 a month, Google will provide cable-TV-like service over the fiber, too, and a tablet computer that works as a remote. 

The channel lineup includes Nickelodeon, Discovery, Bravo, Starz and Showtime (which may require additional fees) but is missing AMC, HBO, CNN, Fox News and ESPN. Google spokeswoman Jenna Wandres wouldn’t say why the channels were missing, but said the lineup would expand. 

Google said it will start hooking up households in neighborhoods only where a sufficient number of people want service. Kansas City residents have six weeks to preregister for service, after which Google will decide which areas have enough interest. 

Google will also offer a slower Internet option, at a DSL-like 5 megabits per second, with no monthly fee to households that pay a $300 installation fee. The free service is guaranteed for at least seven years, but is available only in neighborhoods where enough people have preregistered. 

The $70 fee is more than what cable or phone companies charge for basic Internet service, but the service is also much faster. Gigabit speeds, or 1,000 megabits per second, are generally unavailable from other companies. One exception is the city-owned electric utility in Chattanooga, Tenn., which has pulled its own fiber and sells gigabit service for $350 a month. 

Kansas City, Mo., Mayor Sly James, who attended the news conference Google held in a converted yoga studio in midtown Kansas City, was clearly pleased with the announcement. 

“We now have an opportunity to take a giant step and if we don’t it’s all on us,” James said. “It’s going to be a great educational tool ... that’s going to create innovators and entrepreneurs, and that’s exactly what we want.” 

There are few ways for consumers to take advantage of gigabit speeds. For everyday activities such as Web surfing, email and video-watching, there will most likely be no substantial difference. The higher speeds will help with video sharing and online backups. 

Google is hoping that the network could help the development of other advanced applications that can take advantage of the high speeds. It’s also hoping to spur phone and cable companies into upgrading their own networks. 

“Access speeds have simply not kept pace with the phenomenal increases in computing power and storage capacity that’s spurred innovation over the last decade,” Milo Medin, Google’s vice president of Access Services, said in a blog post. 

However, it’s expensive to pull optical fiber compared with using existing phone and cable lines to provide Internet service. Verizon Communications is the only major U.S. telecommunications company to have connected homes directly to fiber. Wall Street analysts say that project, which has cost $23 billion, is not paying off. 

Verizon has stopped adding new communities to its network, dubbed FiOS. It charges $70 a month for download speeds of 15 megabits per second, less than 2 percent the speed of Google’s gigabit. 

Justin Venech, spokesman for Time Warner Cable, which provides service in Kansas City, said Thursday that he watched Google’s announcement online and said he didn’t see “too many things that jumped out at me beyond the speed.” 

“Kansas City has been competitive for video and broadband services for a long time,” Venech said. “We offer advanced products and services today and we have experienced local employees delivering local services.” 

Charity Organizations are shooting themselves with this ridiculous approach

I won't donate even a single dime to such charity organizations. In principle, I am against charity any how. Best Charity you can do is to create jobs for people. Creating job is best Charity any rich man can do. Unfortunately I am not yet in this category, but trying my best ;-) but In the mean time I do donate my blood, which I hope saves some lives somewhere.. 


There may be some cases where instant input charity like cash/food/cloth donation may have some value.. I have nothing against who donates for different causes.. Everyone has right to do whatever they feel is best usage of their money. If donating or charity helps them mentally or gives them pleasure then be it.. 

Coming back to this issue of Larry's charity business. If I were him, I would definitely cancel any charity to such organizations and also tell my friends not to. This guy is great.. he created tens of thousands of jobs by his sheer intelligence and hard work. He has done more than enough for this world. He doesn't have to do charity. He doesn't have to follow Bill Gates and other billionaires who are donating almost all their wealth for good cause.. Larry is Larry.. Even though after reading details of this article, it seems that he has donated a lot and almost all his wealth is scheduled to be donated during and after his life time.. Larry has full right to do whatever he feels is best usage of his wealth..

I am short on time today.. I will write more on this issue.

Cheers!!!

BADGERING A BILLIONAIRE

Picking on Ellison fun— but flawed

Silicon Valley nonprofit takes Oracle CEO to task despite his donations

You’ve got to admire the spunk of Perla Ni over at GreatNonprofits for taking on Larry Ellison.

It’s not exactly a path to success, as others who have taken on the Oracle CEO will be quick to tell you. But in recent weeks Ni has featured Ellison front and center on the nonprofit’s blog, presenting the billionaire as the Silicon Valley pinup for those who are tightfisted with enormous wealth.
“It just stands out that one of the richest men here in Silicon Valley doesn’t seem to be doing his part in philanthropy compared to some of his peers,” she says.

One blog post, in a breezy style, chronicles Ellison’s purchases of yachts, monster homes, luxury cars and tropical islands. The post speculates that the oracle of Oracle bought Lanai to keep up with rival moguls Richard Branson and Marc Benioff, who each control bits of tropical paradises themselves. It points to public filings that indicate that Ellison’s foundation in 2010 donated a sum equal to .00083 of Ellison’s wealth. And it asks readers to recommend causes to which Ellison might contribute. You can find the post and a followup at www.greatnonprofits. org/nonprofitnews .

One goal of the Ellison campaign is to get people talking about philanthropy in Silicon Valley — and that’s a good thing. But I’m not sure picking on Ellison is the best way to go about it.

Ni’s got the right idea — the polite world of Silicon Valley philanthropy could use a little irreverence. But she’s got the wrong target. As much fun as it is poking fun at one of the world’s richest men, the fact is the guy gives. Sure, his main beneficiary appears to be The Ellison Medical Foundation, which supports work on prolonging life, presumably including Ellison’s. (I’ve said before that it’s hard to make the argument with Ellison that “you can’t take it with you.” He doesn’t plan to go.) But it can be tough enough getting Silicon Valley titans to give without questioning the causes they choose to support. In fact, Ellison recently said that he’s contributed about $1 billion. And he’s signed The Giving Pledge, a promise to donate most of his wealth to charity during his life or after he dies. 

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Ellison

Oracle’s billionaire CEO is one of the world’s richest men, but he has been derided in Silicon Valley for not giving enough of his fortune to charitable causes.

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Despite its flaws, I’m glad GreatNonprofits launched the Ellison campaign. It’s a reminder of how difficult discussions about giving can be here. 

Silicon Valley is a land of plenty with a laser focus on business success. It’s a place about getting to the next big thing before the next person; a place where it’s not good enough to keep up with the Joneses — you need to blow by them like they’re standing still. It’s a place where the big picture can get lost in the blur of the race. 

There have always been exceptions — exceptional exceptions, even, like Bill and Flora Hewlett, David and Lucile Packard, Gordon and Betty Moore, Pierre and Pam Omidyar, Sergey Brin and Anne Wojcicki, Mark Zuckerberg and others, including many significant but lesserknown family foundations. 

But Ni is looking for more, as she should. “You know, we need some irreverent people on the nonprofit side,” says Connie Martinez, CEO of 1stACT Silicon Valley, who has worked to bring attention to the needs of arts nonprofits here. “We’re very polite, but you need to fight for your positions. 

I guess the only question is how do you do that.” 

Martinez says she would not do it by pointing fingers at individuals, but she’ll watch to see how Great-Nonprofits’ campaign goes. 

So far, it is creating buzz on the organization’s website, where people are posting about the good works their own nonprofits or their favorite nonprofits are doing. 

That feeds directly into GreatNonprofits’ mission: getting people to think about philanthropy. The organization’s site is a Yelp for charitable organizations — those who contribute to, are helped by or are involved with nonprofits write reviews of their experiences. Ni says it provides exposure for some of the smaller nonprofits that people otherwise wouldn’t hear about. 

Ni, the founder of the Stanford Social Innovation Review with degrees from UC Berkeley and Harvard law, is no dummy. She no doubt saw the potential for the Ellison campaign to bring attention to her organization and to the topic of philanthropy in Silicon Valley, a topic that seems to resonate more and more as the area matures. 

“We’re starting to see a shift in philanthropy in the valley,” she says. “We want to nurture that shift and make sure that philanthropic potential in this valley fully blossoms.” 

And so how is it that Ni and her staff came up with this Ellison idea in the first place? Turns out, GreatNonprofits is Oracle’s neighbor in Redwood Shores — a place where Ni says, “there is no place to eat except the Oracle cafeteria.” 

Yep, they dine in the belly of the beast and when they do the conversation sometimes turns to Ellison, his massive wealth, what he does with it and what he could do with it. Which means both that Ellison is a target of convenience and that the GreatNonprofits crew’s lunch routine could be in jeopardy. 

So far, they haven’t heard from Ellison and no one at his company’s dining hall have given them trouble. 

“They haven’t recognized us yet,” Ni says. 

At this rate, it’s only a matter of time. 

Contact Mike Cassidy at mcassidy@mercurynews. 

com or 408-920-5536. Follow him at Twitter.com/ 

I think, real reason is iPhone5 wait..

In my view it is all non-sense.. I think lot of customers are simply waiting for iPhone5. Samsung's Galaxy III turned out to be bummer and wasn't able to generate any new refresh cycles.

Nevertheless, ATT, should pour in some of these profits back and improve system health and call quality and poor coverage.. Otherwise whatever they do they won't be able to survive for long..

AT&T posts record profit for wireless

NEW YORK (AP) — AT&T on Tuesday posted the best profitability ever in its wireless arm, paradoxically because it sold fewer smartphones.The largest telecommunications company in the U.S. said its subscribers are now holding on to their phones longer: The rate of upgrades to new phones was at a record low in the second quarter. That’s good news for the company because it subsidizes each smartphone by hundreds of dollars to be able to sell it to customers for $99 or $199. iPhones, in particular, are expensive to sell, because Apple charges AT&T an average of about $650 apiece. In March last year, AT&T started telling subscribers they had to stay on contract for 20 months before they would be eligible for a new phone at the fully subsidized price. Before that, some high-paying customers had been eligible for upgrades after just 12 months.

“It appears our policy is working,” John Stephens, AT&T’s chief financial officer, told analysts on a conference call. He said another big contributor to the low upgrade rate was that many people upgraded late last year, when the latest iPhone debuted.

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CX MATIASH/ASSOCIATED PRESS

A low rate of upgrades by smartphone users helped boost profit for AT&T’s wireless division.

Will Netflix come out of this mess?

I think Netflix needs to take some corrective actions before they plunge too deep in financial mess. Actually lot of it was already projected due to expansions in newer markets. What is new is slow growth rate of new subscribers and bigger attrition of DVD-by-mail business.

In my view they should do following tactical initiatives while they continue to focus on bigger grander vision of providing entire world with all the possible media streams..

1. New Class of Subscribers - Get more subscribers in College campus by limiting not only number of simultaneous streams any account can view but also, limit the number of different locations simultaneous or otherwise.. That should stop account sharing in college campus and will force lot of new subscribers. $10/month is not a big deal for college grads it is just that it is so easy to share Netflix account it simply doesn't make any sense to pay. Disclaimer: this is based on the rumors I have heard. I haven't actually seen it yet. They can easily do it by minor enhancements on tracking IP address of clients and possibly some other ways as well.. 
2. Roam-ability - It is big bummer that when you travel, you can't watch Netflix as you are outside US. They should give some kind of ability to select portable devices of users to be able to view content while traveling outside US. They can charge little bit of premium for it or not.. At least I won't mind paying few extra bucks if they let me watch it on my laptop while I am travelling international. Though, I don't know how many users will care about this feature.. but definitely, it will remove big pain point for many. 
3. They need to stop treating DVD by mail as second class citizen in their company. It was their foundation and still is a great cash cow for them. Nobody treats your "Present" so bad for the sake of better "Future". As long as it doesn't generate loss for them, they should continue to push it harder. I would still love to have DVD by mail service. It was so convenient and you could watch lot more and better movies at better quality without worrying about internet speed or while traveling or camping or anything..  Netflix is in Media Streaming business.. they shouldn't care about Physical Media.. They did grave mistake of first offering streaming for free to DVD by mail customers and then start charging it separately. At least I can't understand it.. They could have created separate category of Premium streaming or some other category.. They could have stopped adding more content in this free version of streaming to push their premium Streaming version or they could have simply hiked prices like a dollar or two.. but that was ridiculous thing they did.. okay.. it was done.. but still before they go to graveyard.. they can rectify and come up with better DVD by mail plus streaming option with mid point pricing of yesterdays and today.. 

Netflix is great company and in all probability they will survive this storm. I can't predict if this is right time to buy their stock or sell. But they will be there for sure.. Question is, will they thrive like old days or just survive and grow slowly to be ultimately eaten up by some other big fish..

STOCK PLUNGES

Investors punish Netflix’s Q2 results

Subscriber growth less than projected, outlook may point to losses

By Troy Wolverton

twolverton@mercurynews.com 

LOS GATOS — Netflix’s stock plunged more than 16 percent in late trading Tuesday after the company posted weak subscriber growth and warned of future losses that call into question analysts’ forecasts for next year.

As part of its second-quarter report, which included a 91 percent drop in earnings, the Los Gatos company warned that it may not meet its previously stated goal of adding 7 million new U.S. streaming video subscribers this year, after adding a paltry 530,000 new subscribers in the second quarter. The company also warned that it might post losses in both its third and fourth quarters thanks to a costly international expansion of its streaming video business.

Thanks to those losses, Netflix’s bottom line is likely to finish somewhere around break even for the year, said Michael Pachter, a financial analyst with Wedbush Securities. Meanwhile, the company continues to lose subscribers to its DVD-by-mail business, which provides the bulk of its profits.

Combine those two factors, and it’s unlikely that the company will meet Wall Street’s expectations of a $2.13 per-share profit for next year, Pachter said. And if it can’t hit that target, its price has to come down, he said.

In after-hours trading, Netflix’s stock was down $13.39, or 16.7 percent, to $67.

“It’s becoming clear to people that $2 (profit) figure is fricking wrong,” Pachter said. “The company is overvalued. That’s why it’s down.”

The online movie company announced Tuesday it earned $6.2 million, or 11 cents a share, in its most recent quarter. That was down sharply from the $68.2 million, or $1.26 a share it earned in the same period a year earlier.

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JUSTIN SULLIVAN/GETTY IMAGES ARCHIVES

Netflix profit fell 91 percent in the quarter, and it warned it may fall short of the 7 million new streaming customers it had projected for the year.

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But it was up from the first quarter, when the company posted a loss of $4.6 million, or 8 cents a share, a rare trip into the red for Netflix. 

The company’s sales in the second quarter were up 13 percent from the year-ago period to $889.2 million. 

The results topped Wall Street’s expectations. On average, analysts polled by Thomson Reuters were expecting the company to earn 5 cents a share in the quarter on sales of $888.9 million. 

But the company clearly faced challenges. Its international business posted an $89 million segment loss in the quarter, helping to bring down its overall results. Netflix also continued to shed DVD subscribers. The total number of DVD customers fell to 9.2 million by the end of the quarter, down 850,000 from the previous period. The company has lost about 5.8 million DVD customers since last summer, when it raised prices as much as 60 percent and announced — and then canceled — a move to rename and spin off that business. 

Despite those subscriber losses, Netflix’s DVD business posted a $133.8 million segment profit in the quarter. The U.S. streaming business, which now has 23.9 million customers, posted an $83.1 million profit. 

Netflix doesn’t include technology, development or administrative costs when it calculates the segment profits of its business divisions. If those costs are included, Netflix’s U.S. streaming business would probably show a minuscule profit, if it was able to show one at all, Pachter said. 

Netflix forecast that it would add 1 million to 1.8 million U.S. streaming subscribers in the third quarter but said that it would have to hit the top of that range to be on target for its annual goal. 

In a statement, CEO Reed Hastings and Chief Financial Officer David Wells touted the company’s return to profitability in the second quarter, noting that Netflix’s results exceeded the guidance they gave last quarter. They also argued that the company’s international expansion, which led to the company’s loss in the first quarter and could lead to losses in the next two quarters, is the best thing for Netflix’s long-term business. 

“We have enormous challenges ahead, and no doubt will have further ups and downs as we pioneer Internet television,” Hastings and Wells said in the statement. We are making progress in every market we serve, and see a oncein- a-generation opportunity ahead to build the world’s most popular TV show and movie service.” 

In the current period, the company expects its bottom line to range from a loss of $6 million, or 10 cents a share, to a profit of $8 million, or 14 cents a share. It forecast sales ranging from $890 million to $911 million. Before the report, analysts had forecast that Netflix would earn 11 cents a share in the third quarter on sales of $905.9 million. 

Contact Troy Wolverton at 408-840-4285. 

Power of Internet - Free and Quality Education

These examples demonstrated real power of internet.. amazingly great classes and courses available from top schools and universities of world available for free.. If you only care about knowledge and don't care about piece of paper (degree) then you can literally do PhD.. You just need to have desire and passion and decent internet connection. off-course you need time as well (which is most common excuse for grown ups like  me ;-) )

UC Berkeley joining or I should say expanding the free courses available online. I think lot of courses from lot of great universities are already available online on different platforms and locations. I know MIT, Stanford and many other great schools have superb presence online. Now a days, with iTunesU kicking in more and more courses in its portfolio.. This is great for someone studying in remote engineering colleges in India where Professor and other resources availability could be challenge (that is the best decent political correct term I can think off). In-fact those type of kids can easily attend in group setting along with their Professor or lecturers.. This can simply revolutionize quality of education across the globe..

Good Job!!! Keep it up!!

UC BERKELEY

Courses by Cal going online

Some UC faculty are worried about diluting prestige

By Matt Krupnick

mkrupnick@bayareanewsgroup.com 

With some professors grumbling over the University of California’s expanding online presence, UC Berkeley is joining two of its top competitors to bring free college courses to the masses.

The university will offer two free online classes this fall as part of the edX collaboration, which also includes Harvard and the Massachusetts Institute of Technology. UC Berkeley employees were told about the partnership Monday.

The edX venture is Berkeley’s latest foray into the MOOC, or massive open online course, arena. The school already offers classes with Coursera, another free program that also includes Stanford, Princeton and the University of Michigan. Together the two ventures have some 950,000 students.

Some educators have complained that free online classes could hurt UC Berkeley’s reputation. Participants are working hard to keep that from happening, said Armando Fox, a UC Berkeley computer science professor who has helped teach a Coursera class and will do the same with edX.

“We would not have agreed to do an online course if we did not think we could maintain that standard of quality,” he said. More than 100,000 students from around the world have enrolled in his Coursera classes, he said. 

The edX experiment comes as the 10-campus UC system works to expand its own online program. The university recently began offering a handful of credit classes online to UC students and will bring non-UC students into the mix this year at up to $2,100 a class. 

Faculty leaders have cautioned the university against moving too quickly with the online courses. The UC Academic Senate has said it worries about the quality and finances of the UC Online project. 

In contrast, some of those most concerned about UC’s plans say they support free projects like Coursera and edX. 

“I’m not at all opposed to the open-sourced courses,” said Wendy Brown, a UC Berkeley political-science professor who has criticized the university’s approach to online education. “The experiments need to happen to develop these technologies.” 

The different models — UC’s own versus edX and Coursera — provide disparate benefits to students. 

UC’s online program is meant to expand the reach of UC classes, and students gain college credits for completing the courses. The stakes, professors say, are higher when the UC brand on a class is so prominent. 

But Coursera and edX offer only certificates, so the risk to an individual school is not as high. The programs offer free education to people who might otherwise be shut out from elite universities, said John Wilton, a UC Berkeley vice chancellor who has helped develop the school’s online partnerships. 

“There’s a public-good component to this, which I think is very appealing to the universities involved,” Wilton said. Universities have an obligation to improve online education, he said. “It’s not like we cannot do this. We have to do this.” The free courses do have detractors, however. UC campuses should concentrate more on their own students, particularly in the midst of a budget crisis, before leaping into such partnerships, said Christopher Edley, the UC Berkeley law dean who has helped guide the university system’s online development. 

“I worry that jumping into what our private peer institutions are doing feels a little like me-tooism rather than a vision,” he said. “Our mission has to do more with figuring out how to serve the thousands of California students who won’t fit on a UC campus. 

“It risks being a distraction from the somewhat urgent need to figure this stuff out.” 

Contact Matt Krupnick at 510-208-6488. 

Fix US Corporate Tax Laws

They are highest in developed countries.. it is no surprise.. why will you like to pay 3.5 billion in tax when you don't need rest of the money.. this is crazy.. US needs some leader/s who can fix this tax code.. there are tons of other issues with tax codes.. but this is a big bummer.. they have to fix it..


Part of Apple’s profit on sales is stashed in other countries

Like other multinationals, tech giant seeks to change tax law

By Peter Svensson

Associated Press

NEW YORK — On Tuesday, Apple is set to report financial results for the second quarter. Analysts are expecting net income of $9.8 billion. But whatever figure Apple reports won’t reflect its true profit, because the company hides some of it with an unusual tax maneuver. Cupertino-based Apple, already the world’s most valuable company, understates its profits compared with other multinationals. It’s building up an overlooked asset in the form of billions of dollars, tucked away for tax bills it may never pay.

Tax experts say the company could easily eliminate these phantom tax obligations. That would boost Apple’s profits for the past three years by as much $10.5 billion, according to calculations by The Associated Press.

While investors might rejoice if Apple suddenly added $10.5 billion to its profits, unilaterally erasing a massive U.S. tax obligation could tarnish its reputation as a relatively responsible payer of U.S. taxes. Instead, the company is lobbying to change U.S. law so that it can erase its liabilities in a less conspicuous fashion.

Like other companies, Apple typically keeps profits on overseas sales in overseas accounts. When someone buys an iPad in Paris or Sydney, for instance, the profit stays outside the United States.

Apple may pay some corporate income taxes on that profit to the country where it sells the iPad, but it minimizes these by using various accounting moves to shift profits to countries with low tax rates.

Me too Woody..

I am also holding on to my purchase of smart phone.. waiting for iPhone5.. Come on Tim Baboo... just do it.. release IT NOW ;-) and please don't make iPhone4 mistakes.. please make sure that its core phone function is better or at least same as iPhone4S.. otherwise you will make me wait for another year for another refresh cycle..

Cheers!!!

iPhone buyers awaiting update may hurt Q3 sales

By Salvador Rodriguez

Los Angeles Times

Analysts say they believe sales of Apple’s iPhone 4S have begun slowing as more users sit on the sidelines awaiting the arrival of the nextiPhone. With the Cupertino tech company releasing its latest earnings report Tuesday, analysts expect that Apple will announce it sold fewer iPhone 4S units than it did in the previous quarter. Apple sold more than 35 million of its latest smartphone last quarter, but Andy Hargreaves of Pacific Crest Securities told Bloomberg he expects this quarter’s number to be closer to 25 million, while Katy Huberty of Morgan Stanley expects the number to be more than 31 million.

A recent survey by ChangeWave Research is also showing evidence that a slow down is happening.

The survey shows 14 percent of all consumers are saying they are “very likely” to get the next iPhone while 17 percent say they are “somewhat likely.” If the company does announce a lower number it will be a repetition of last year when iPhone 4 sales began to slow leading up to the launch of the iPhone 4S in October.

Is Nicira really worth this much or it is just an extension of hype..

I have very high regard for VMware and some of the founders of Nicira like Scott Shenker. I love VMware's products and really believe that they are big time game changer and real catalyst for growth of next generation of data centers and so called cloud. Scott Shenker on other hand is great technologist with super cool ability to convey them to masses like me. I loved his talk in Ericcson conference on SDN. For those who are interested can view it on http://www.youtube.com/watch?v=WVs7Pc99S7w

Coming back to this latest acquisition.. All these terms like Cloud, Virtualization, SDN (Software Defined Networks) etc.. are really hot as of now.. I see this acquisition more of extension of the hype surrounding these terms.. SDN is great concept and in my view has great potential.. So is NVP (Network Virtualization Platform) which is already foundation of existing Virtualized Data Center. But SDN is more or less in infancy and key thing there is execution and marriage of software and generic enough hardware. NVP alone is not going to be big enough driver to change the game. Current VMware and other companies' products work fairly well already.

My point is... One Billion Dollars is lot of money.. What ever Nicira has done so far can be easily done (execution) with couple of hundred million dollars of investment or development in even big companies like VMware.. I think there is got to be some premium for talent and what is already available vs. being development effort in big company like VMware.. However.. I am still not convinced that it is right thing for VMware shareholders. It is more of whims and fancies of Sr. Execs which determines these exorbitant purchasing prices.. These type of acquisitions are the mostly responsible for slower or lethargic growth as these companies mature. There is hardly any accountability.. Nobody will be ever fired if VMware is not able to realize even half of the dollars they had spent. We have seen that in many other companies... actually, for that matter, this is really small amount to be bothered in a company like VMware.. but still, if you look from Share holder's perspective.. it is not change.. In my view they should fix some accountability issues.. also.. explain why and how they need Nicira.. how they are going to realize commercial value out of it..

NETWORKING

VMware to buy Nicira for close to $1.3 billion

By Patrick May

pmay@mercurynews.com 

PALO ALTO — The burgeoning field of computer “virtualization,” which enables a single computer to function like multiple machines, took a great leap forward Monday with word that Palo Altobased business software maker VMware was buying computer networking specialist Nicira for nearly $1.3 billion.

With its announcement on the same day it reported second-quarter earnings that beat analysts’ estimates, VMware is making a head-turning bet on a 5-yearold, privately held company, also based in Palo Alto, that raised a relatively paltry sum of $50 million from its early investors.

With its NVP, or network virtualization platform, Nicira (pronounced “nice era”) will ostensibly do for networks what VWware has done for computers — magically create multiple virtual networks that work together in tandem but unleash much more computing power than a single network could ever achieve. 

VMware will pay $1.05 billion in cash, plus assume responsibility for $210 million in stock awards that Nicira had given its employees. The purchase of Nicira, whose early customers include AT&T, eBay, Fidelity Investments and the Japanese telecom giant NTT, means a handsome payoff for its investors, including Andreessen Horowitz, Lightspeed Venture Partners and NEA. 

“VMware has led the server virtualization revolution, and we have the opportunity to do the same in data-center and cloud networking,” CEO Paul Maritz said in a statement. “The acquisition of Nicira adds to our portfolio of networking assets and positions VMware to be the industry leader in software-defined networking.” 

In a statement that described its efforts with Nicira as creating “the architecture for the cloud,” VWware said “managing networks and network services to support cloud architectures is complex, time consuming,” and the company praised Nicira for its cutting-edge work in boosting the power of data centers. 

“Nicira helps customers dramatically improve business velocity and efficiency by transforming how networking works in the cloud era,” Nicira CEO Steve Mullaney said in a statement. “I’m thrilled to be joining forces with VMware to help build the software-defined data center.” 

Analyst Trip Chowdhry with Global Equities Research said that while the move provides a way for VWware to broaden its virtualization efforts into software, the price it’s paying for the young company raises troubling questions. He said the offer suggests “that we are in a valuation bubble,” mentioning a previous big-ticket purchase that another valley giant recently announced. 

“This purchase is as irrational if not more irrational than Facebook buying Instagram for $1 billion,” Chowdhry said. “VMware should not be throwing shareholders’ hard-earned money at unproven companies with unproven concepts. What’s the business model here? I don’t know, do you?” 

Strategically, Chowdhry said, the acquisition does make sense. “But when you pay a billion plus, that tells me you’ve lost your senses,” he said. “And that’s very scary.” 

The Associated Press contributed to this report. Contact Patrick May at 408-920-5689; follow him at Twitter.com/patmaymerc.