Weekend news roundup

27 Sep 2010

A quick glance at some of the technology stories breaking in the weekend papers.

The problem at Apple’s core

The Observer’s John Naughton had an interesting article on a major strategic problem facing Apple. After a visit to an Apple Store with his daughter and a good look around, a harsh reality may have struck Naughton. Naughton said that at the centre of the Appleverse sits a single, crucial piece of desktop software – iTunes. You can do very little with an Apple device without hooking it up to iTunes. Until now, this has given Apple a key strategic advantage over all other competitors. But, as Britain discovered with the Suez canal in the 1950s, being unduly dependent on a single strategic asset can also have serious downsides.

The problem is that iTunes is now a pretty ancient piece of software. When it first appeared in 2001 as a reworking of SoundJam, a program Apple bought from a California company in 1999, it provided an elegant way of doing just one thing: getting songs from CDs onto your computer’s hard drive. But over the years, more and more functions have been added: first the management of iPods, then the Apple online store. Then iTunes became the conduit for managing one’s iPhone. The latest addition is the Ping social-networking function.

This is what the industry calls “feature creep” on an heroic scale. One seasoned commentator, Wade Roush, reckons that iTunes is now called upon to perform 27 distinct functions – which leads him to call it “the Leaning Tower of Ping”. “Adding a social-networking interface, on top of all of iTunes’ other functions,” he says, “is like grafting another limb to the forehead of an octopus. It’s just too much.”

He’s right. It’s inconceivable that Apple doesn’t know this, too. So somewhere in Cupertino there must be a team working on redesigning iTunes from the ground up. And if there isn’t, then perhaps Apple CEO Steve Jobs ought to check out the Wikipedia entry for the Suez crisis.

Eric Schmidt on open versus closed

The Wall Street Journal over the weekend carried its Big Interview video with Google CEO Eric Schmidt, where Schmidt said that Facebook wasn’t the threat to Google, Microsoft’s Bing is. This is contrary to what most people actually would think, as the tendency has been to criticise Microsoft for being late to the search game, but no one knows the technology industry as well as Schmidt, who has been CTO of Sun Microsystems and has sat on the board of Apple. Schmidt also was at pains to point out the difference between the open and closed technology worlds and while describing devices like the iPad and iPhone as beautiful pieces of technology, Apple’s closed ecosystem was at odds with the open ethos he endorses at Google. He also talks about the Android strategy and is relaxed and poised. Truly a good interview and worth checking out to see what Schmidt thinks of the tectonic shifts in technology today.

Clash of the old and new media titans

The Irish Independent on Saturday carried an interesting piece on the collision course between old and new media after the former executive editor of one of the most feted newspapers in journalism called news aggregator websites “parasites” living off traditional media outlets.

Speaking at City University in London, the former executive editor of the Washington Post Leonard Downie called news websites that draw content from across the web – known as aggregators – “parasites living off journalism produced by others”.

“These sites attract readers with news, opinion, features, photographs and video that they continuously collect – some would say steal – from other national and local news sites,” he said in a bitter attack that took pundits by surprise.

However, Arianna Huffington, who runs the Huffington Post – an aggregator website that now commands more page views than the New York Times website – hit back at Downie, accusing him of being behind the times and denied that aggregators were stealing material from established companies.

“People like Leonard Downie continue to confuse aggregation with wholesale misappropriation, which violates copyright law,” she said.

“At the Huffington Post, aggregation goes along with a tremendous amount of original content, including original reporting and original blog posts. And we love it when someone links to one of our posts, or excerpts a small amount and links back to us.

“We adhere to copyright law and ‘fair use’ guidelines, and when excerpting a story, we only offer enough of it to give readers a flavour and the ability to comment on it, without gutting the incentive to go to the original source to read more,” she added.

Pfizer on life science’s potential riser

The Sunday Independent’s business section carried an opinion piece from Pfizer’s Paul Duffy on how we could make Ireland a global hub for life sciences research. Greater collaboration across the sector and strong links between research and manufacturing is the way to realise our potential, he wrote. Jobs are the key to our economic recovery but right now we have more than 450,000 people out of work. There has been much debate on where these new jobs will come from and I believe we need to refocus on what initially created the Celtic Tiger – exporting valuable services and goods, and not domestic consumption and the construction sector.

It is widely recognised that exports will help drive economic recovery and when we look at exports, one sector dominates. The life sciences sector accounted for almost 50pc of total national exports in 2009, with exports growing year on year – by about 6pc since 2000. The sector employs in excess of 52,000 people in more than 350 enterprises. Not only does the sector provide direct employment for highly qualified people but it is also responsible for between 62 and 137 supporting services jobs for every 100 jobs in the sector.

This already represents a significant success story, but there are further global opportunities. I believe that Ireland has a real opportunity to exploit these and in so doing not only deliver jobs but also the medicines and devices which improve the lives of our citizens and those of millions of citizens around the globe.

Venture forth and conquer!

The Sunday Tribune had an interesting story about how Enterprise Ireland wants equity managers to invest more cash at home, but has limited control over such funds. When Enterprise Ireland reported over the summer that it was the largest equity investor in Ireland last year, with €75m in development capital committed to 220 companies, the data was presented as an achievement of Irish enterprise policy. After all, start-up companies were getting millions in funding and the state was helping them.

But behind the scenes, Enterprise Ireland is trying to lean on venture capital (VC) fund managers to pick up more of the slack and put cash into the pockets of high-potential small businesses. There is a perception within the state agency that the domestic VC funds – to which Enterprise Ireland contributes tens of millions – are not putting enough available money into early-stage companies.

Enterprise Ireland’s growth capital manager, Des Doyle, said the agency has had “firm words” with fund managers over the issue, although he would not say which funds were holding back on investible opportunities.

Enterprise Ireland is in the middle of its third multi-year seed and venture capital programme, with a commitment of €150m to funds which collectively bring €600m to the table. So there is certainly a good deal of money available in VC funds at the moment, especially given the spend per company is usually about €500,000 to start. So far €116m of those available funds have been spent – slightly less than 20pc – on 55 companies.

The question is whether fund managers are better off hoarding or investing under the current difficult and uncertain economic conditions.