Weekend news roundup

25 Jul 2011

A trawl through some of the weekend papers’ tech coverage, including a US judge throwing out Oracle’s case against Google’s Android OS, how social shopping via tuned in blog recommendations will become all the rage and how cloud computing will explode in Europe.

Judge throws out Oracle case against Google Android OS

The San Jose Mercury News reported that a federal judge late Friday rejected an Oracle expert’s report estimating damages of up to US$6.1bn in a closely watched lawsuit over Oracle’s claim that Google infringed on its patents.

But in his ruling, US District Judge William Alsup gave Oracle a chance to revise its estimate. He also sided with Oracle on several other points in the high-stakes case, which is set for trial this fall.

Oracle contends that Google’s popular Android operating system was created by infringing patents for the Java programming tools Oracle acquired when it bought Sun Microsystems last year. The lawsuit is one of several disputes that have arisen recently between tech companies battling over their share of profits from the growing market for smartphones, tablets and other mobile computing gadgets.

The cloud revolution about to strike Europe

The New York Times reported that Europe is finally catching up on the cloud computing revolution. When the founders of Shutl, a British courier service that makes deliveries in 90 minutes in busy London, decided to set up a business that ran exclusively on cloud computing, they needed to get creative.

Data privacy laws in Europe forbade the transfer of information about individuals outside the 27-country European Union. That had prevented many companies on the continent from moving to the cloud, where data may be stored on remote servers in Asia, the United States or elsewhere at a lower cost than what a company would pay for its own servers.

Yet despite the tricky legal landscape, Shutl, now a two-year-old start-up, has become one of Europe’s most avid users of cloud technology. The company carries out more than 1,000 deliveries a day over a cloud network operated by Amazon, the US web retailer.

Amazon.com, one of the world’s largest sellers of cloud services, helped clinch deals with Shutl and other European businesses, like the French railroad company S.N.C.F. and Bankinter, a Spanish bank, by effectively moving the cloud to Europe by setting up a data centre in Dublin. Tom Allason, the Shutl founder and chief executive, said the company planned to expand from London to all of Britain and Ireland. “Cloud computing helped make Shutl possible,” he said.

While cloud computing remains the exception, not the rule, in Europe, the trend is gaining momentum. According to research firm Gartner, annual sales of cloud services in Europe will rise 4.3pc, to $29.5bn in 2015 from $24.7bn this year.

Sales will still be only roughly half the level of revenue in North America, where remote computing was developed and its biggest sellers – Amazon, Salesforce.com and Microsoft – are leading an industry that Gartner says will generate $60bn in sales this year.

Blog to buy networks becoming the rage

The Independent on Sunday reported that social shopping – the use of social networks and blogging to sell products and rate them – is now top of any retailer’s marketing strategy.

Fashion blogger Bip Ling makes her way through the young, hip crowd at last Wednesday’s UK launch party of the US retailer Forever21’s store in London.

Wearing the tiniest of green shorts, 21-year-old Ling is the queen of the A-list bloggers that retailers fear could make or break their businesses.

Forever21 made sure it had all the right guests at the launch, young bloggers such as Ling and those from other sites, including myfashionlife.com, Iamvintagelover.com, 5inchandup.blogspot.com, culturejunkie.co.uk and gluttonforgrandeur.com, who talk to their target consumers.

Earlier this year, friends Kevin Flood and Mike Harty launched a business combining price comparison with social networking. Their creation, Shopow, has 3,500 members and so far has signed up 10,000 businesses to sell products through its site, including John Lewis, PC World and Asda.

Flood and Harty, who met at Leeds University, get between 4pc and 12pc of every sale made through the site. They have also secured enough funding to launch a site in the US in the autumn, which will coincide with the planned UK fresher week parties. Flood explains: “Students are an ‘early adopter’ market for social networks. And, obviously, students seek bargains and good deals so Shopow is perfect. But the site is used by all age groups.”

Tell the tech industry there’s a recession on

The Financial Times asked at the weekend for someone to please let the technology industry know the economy is slumping. Of the 10-largest US tech companies, eight (Apple, IBM, Microsoft, Google, Oracle, Intel, Qualcomm and EMC) have reported earnings recently. Their news has been good.

Aggregate revenue grew by nearly 30pc, or $25bn; net income grew by nearly 40pc, or $8bn. Apple contributed about half of the dollars, but strip Apple out and the sales and earnings growth rates are still 16pc and 23pc respectively. All eight managed to beat Wall Street expectations. Guidance (leaving aside Apple’s habitual caution) has been fine.

This latest quarter comes after the industry had already compiled a respectable record. Since world stocks peaked in late 2007, the S&P information technology index is up slightly, and 10pc ahead of the total S&P.

Tech did no worse than the broad market on the way down and outperformed it on the way up; the only sectors it lags over that period are consumer staples and consumer discretionary. And the tech index’s earnings have risen nearly 80pc since the peak, far overshooting the index’s price.

Given this, is it too much for tech investors to hope for a little multiple expansion?

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John Kennedy is a journalist who served as editor of Silicon Republic for 17 years