If the success of NetSuite's IPO this week was any indication, the market for on-demand ERP (enterprise resource planning) software is red-hot. Startup NetBooks hopes to capitalize on that.
NetBooks recently began offering hosted ERP software. But the company, based in Rohnert Park, California, has set its sights on a particular class of customer: the millions of small, owner-managed U.S. businesses with between two and 50 employees. "It's the backbone of the economy," said NetBooks' founder, Ridgely Evers.
Evers has long played in this space. While at Intuit, he led the creation of QuickBooks, the popular accounting software.
NetBooks' core suite covers marketing, sales, inventory and finance, but doesn't include functions like e-mail or calendaring. "We're not a Microsoft Office replacement," Evers stressed.
The product is engineered for ease of use, he said: "For our target market, IT is the word 'it.'"
NetBooks has added other capabilities through partnerships, including PayCycle for payroll and UPS Online Shipping. The firm will make major new partner announcements in early 2008 and release new software features throughout the year, according to Evers.
Evers declined to discuss how many customers the firm has landed so far, saying only, "we're very early in our growth."
NetBooks costs US$200 per month, or $1 per hour, for five users, along with free access for a customer's bookkeeper, accountant and "marketing coach." Unlimited support -- accessed by clicking a button within the NetBooks software -- and free upgrades are included in the price. The company also says that if a customer signs up for the service at a given price, they will never pay more for it.
One analyst said NetBooks shows promise but faces many challenges.
"If they do in fact do all the things they claim to do, this is great," said Marc Songini of Nucleus Research in Wellesley, Massachusetts.
"They're doing a smart thing by offering these [third-party] integrations so customers don't have to do it," he added.
Still, he said, "They're very small, and don't have a lot of recognition. It's going to be tough for them to get up and running and get critical mass."
For one thing, NetSuite does sell its service to small businesses, Songini said. Also, if a giant like Google began offering a similar suite of hosted applications, startups like NetBooks would be hard-pressed to succeed, he said.
The other challenge centers on marketing. Larger ERP and CRM (customer relationship management) vendors have clear sales targets: C-level executives. The small business market may be immense, but it is also broad.
"Obviously, that bottom segment of the market is wide-open, but the problem has been, how do you sell to it," Songini said.
Songini said one possibility would be for NetBooks to strike reseller deals with computer manufacturers and retailers like Dell or Radio Shack.
Saturday, December 22, 2007
Oracle's Ellison: SOA migration a slow process
Scoffing at reports alleging the adoption of SOA is slowing, Oracle CEO Larry Ellison said this week that moving to SOA is a slow process but one that presents an opportunity for Oracle.
Speaking on Oracle's earnings conference call Wednesday, Ellison said he had read news articles about the slowing adoption of SOA. But he stressed that SOA requires a change in architecture, which takes time to implement.
"While I've read [these articles], people have to understand when you have a fundamentally new computer software architecture, SOA, it takes a long time for adoption," Ellison said. Moving to SOA is not as easy as flipping a switch, he said.
"It takes about 10 to 20 years before [you can] rewrite all of your applications," he said. But Oracle sees this process accelerating in its middleware business.
"We think it's a long-term growth story, it's a very rapid growth story," said Ellison. "It takes a long time for our customers to have a majority of their applications modernized and we think this is a growth story for a decade for us," he said.
For the quarter ending November 30, Oracle reported revenues of US$5.3 billion, a 28 percent increase over the $4.16 billion reported for the same quarter last year. Net income was $1.3 billion, a 35 percent increase over the $967 million reported for the same time period in 2006.
Speaking on Oracle's earnings conference call Wednesday, Ellison said he had read news articles about the slowing adoption of SOA. But he stressed that SOA requires a change in architecture, which takes time to implement.
"While I've read [these articles], people have to understand when you have a fundamentally new computer software architecture, SOA, it takes a long time for adoption," Ellison said. Moving to SOA is not as easy as flipping a switch, he said.
"It takes about 10 to 20 years before [you can] rewrite all of your applications," he said. But Oracle sees this process accelerating in its middleware business.
"We think it's a long-term growth story, it's a very rapid growth story," said Ellison. "It takes a long time for our customers to have a majority of their applications modernized and we think this is a growth story for a decade for us," he said.
For the quarter ending November 30, Oracle reported revenues of US$5.3 billion, a 28 percent increase over the $4.16 billion reported for the same quarter last year. Net income was $1.3 billion, a 35 percent increase over the $967 million reported for the same time period in 2006.
Wall Street Beat: Uncertainty rules '08 outlook
In the last full trading week of the year, the NetSuite IPO, acquisition news and earnings reports from Oracle, Palm and RIM highlighted technology sector gains, but also concerns for 2008.
Oracle on Wednesday reported net income of US$1.3 billion for the quarter ending Nov. 30, up 35 percent from a year earlier. The report validated its acquisition strategy at the end of what is bound to be a record year for M&A in the tech sector. Oracle's results show it is leveraging homegrown as well as acquired products, cross-selling a broad variety of business applications. Company shares closed Thursday at $22.10, up by $1.34.
The U.S. Federal Trade Commission's approval on Thursday of Google's acquisition of online ad-server DoubleClick helped boost Google shares by $12.32, to close at $689.69, even though the deal requires other government body approvals.
Through November 2007, tech M&A amounted to about $449 billion, close to the total for 2006, according to a report released this week by the 451 Group. With a strong December for M&A, 2007 "could be the first year in tech M&A history to top a half-trillion dollars' worth of transactions," according to the report.
There are a variety of reasons for the banner M&A year, but underlying them all were strong vendor earnings. Next year, though, will likely see a slowdown in deals.
The U.S. housing slump and resulting turmoil in financial markets have raised fears of an overall slowdown in the economy. This could affect consumer and business buying plans as well as the financial results of tech vendors.
"There's a sense of muted expectation," according to the 451 Group's Brenan Daly. "Corporate buying activity reflects to some degree consumer activity. If you are flush with cash and expecting good things from the economy, chances are you're more willing to go out buying."
Meanwhile, the IPO of software-as-a-service vendor NetSuite on Thursday reflected a year for public offerings that was ultimately stronger than expected. Company shares closed at $35.50 after opening at $26.00. IPOs this year underscored confidence in sectors such as SaaS and storage, noted the 451 Group report. In the SaaS arena, SuccessFactors and DemandTec had strong IPOs. In the storage sector, Data Domain and 3Par had solid IPOs, 451 noted.
But the same factors that are likely to contribute to a slowdown in M&A will also probably cause a slump in IPO activity in 2008.
Most IT market researchers are forecasting a slowdown for at least the first half of next year. Growth in U.S. IT investment, for example, will drop to 4.8 percent in 2008 from 5.3 percent in 2007, according to Forrester Research.
In a year of tepid sales, only the best-run companies are expected to have the full confidence of investors. This week's earnings reports from Palm and RIM are a case in point. Palm shares dropped to their lowest point in four years on Wednesday, closing at $5.52, after the company reported a quarterly loss of $9.6 million for the quarter ending Nov. 30. Last year the company earned $12.8 million for the period. Palm stock has dropped about 50 percent in the past two months.
Reporting Thursday on the same quarter, RIM said BlackBerry sales boosted earnings to $370.5 million, compared to $175.2 million last year. Shares jumped by about $10 in after-hours trading, about an hour after the announcement.
Handset markets are booming, but vendors face some of the same pressures as PC makers: Competition has lowered margins. Vendors need to get it all right: good products, good management, and well-managed logistics.
"We view RIM as extremely well-positioned due to carrier partnership strategy, talented management and technology," said Citi Investment Research in a market commentary. On the other hand, Citi fretted that "we are increasingly concerned with Palm's internal controls."
Especially in the most competitive sectors -- such as PCs, handheld devices, telecom and Internet-based businesses -- 2008 will leave much less room for error than 2007, which, despite economic turmoil, turned out to be a strong year for tech earnings overall.
Oracle on Wednesday reported net income of US$1.3 billion for the quarter ending Nov. 30, up 35 percent from a year earlier. The report validated its acquisition strategy at the end of what is bound to be a record year for M&A in the tech sector. Oracle's results show it is leveraging homegrown as well as acquired products, cross-selling a broad variety of business applications. Company shares closed Thursday at $22.10, up by $1.34.
The U.S. Federal Trade Commission's approval on Thursday of Google's acquisition of online ad-server DoubleClick helped boost Google shares by $12.32, to close at $689.69, even though the deal requires other government body approvals.
Through November 2007, tech M&A amounted to about $449 billion, close to the total for 2006, according to a report released this week by the 451 Group. With a strong December for M&A, 2007 "could be the first year in tech M&A history to top a half-trillion dollars' worth of transactions," according to the report.
There are a variety of reasons for the banner M&A year, but underlying them all were strong vendor earnings. Next year, though, will likely see a slowdown in deals.
The U.S. housing slump and resulting turmoil in financial markets have raised fears of an overall slowdown in the economy. This could affect consumer and business buying plans as well as the financial results of tech vendors.
"There's a sense of muted expectation," according to the 451 Group's Brenan Daly. "Corporate buying activity reflects to some degree consumer activity. If you are flush with cash and expecting good things from the economy, chances are you're more willing to go out buying."
Meanwhile, the IPO of software-as-a-service vendor NetSuite on Thursday reflected a year for public offerings that was ultimately stronger than expected. Company shares closed at $35.50 after opening at $26.00. IPOs this year underscored confidence in sectors such as SaaS and storage, noted the 451 Group report. In the SaaS arena, SuccessFactors and DemandTec had strong IPOs. In the storage sector, Data Domain and 3Par had solid IPOs, 451 noted.
But the same factors that are likely to contribute to a slowdown in M&A will also probably cause a slump in IPO activity in 2008.
Most IT market researchers are forecasting a slowdown for at least the first half of next year. Growth in U.S. IT investment, for example, will drop to 4.8 percent in 2008 from 5.3 percent in 2007, according to Forrester Research.
In a year of tepid sales, only the best-run companies are expected to have the full confidence of investors. This week's earnings reports from Palm and RIM are a case in point. Palm shares dropped to their lowest point in four years on Wednesday, closing at $5.52, after the company reported a quarterly loss of $9.6 million for the quarter ending Nov. 30. Last year the company earned $12.8 million for the period. Palm stock has dropped about 50 percent in the past two months.
Reporting Thursday on the same quarter, RIM said BlackBerry sales boosted earnings to $370.5 million, compared to $175.2 million last year. Shares jumped by about $10 in after-hours trading, about an hour after the announcement.
Handset markets are booming, but vendors face some of the same pressures as PC makers: Competition has lowered margins. Vendors need to get it all right: good products, good management, and well-managed logistics.
"We view RIM as extremely well-positioned due to carrier partnership strategy, talented management and technology," said Citi Investment Research in a market commentary. On the other hand, Citi fretted that "we are increasingly concerned with Palm's internal controls."
Especially in the most competitive sectors -- such as PCs, handheld devices, telecom and Internet-based businesses -- 2008 will leave much less room for error than 2007, which, despite economic turmoil, turned out to be a strong year for tech earnings overall.
Hitachi considering 'all options' for hard-disk unit
Hitachi is considering a shake-up of Hitachi Global Storage Technologies (HGST), the hard-disk drive maker that it acquired from IBM in 2003.
The Tokyo company said in a statement to the Tokyo Stock Exchange that it is considering "all options" regarding the subsidiary.
The statement was issued in response to a report in the Friday morning edition of The Nikkei newspaper that said Hitachi is in talks with U.S. investment fund Silver Lake over the sale of just under half the company. The Nikkei said that the two parties are trying to come up with a deal by January however agreement remains some way off because there are disagreements on price.
Hitachi declined to comment beyond its statement.
Despite coming up with several market-leading drives, such as the first terabyte hard-disk drive at the beginning of this year, the company hasn't yet been able to make a profit under Hitachi's ownership. It is the third-largest manufacturer of hard-disk drives behind Seagate and Western Digital.
Hard-disk drive makers have been enjoying better business conditions in the market in the second half of 2007. Early in the year prices fell about 20 percent per quarter but those sharp price declines have now steadied and prices dropped just 5 percent in the fourth quarter, according to a recent report from iSuppli.
The research agency said worldwide shipments of drives hit 132 million units in the third quarter, a 15 percent jump from the 115 million shipped in the second quarter. It predicted the seasonably strong fourth quarter will see a further 11 percent jump in shipments from the previous quarter.
The Tokyo company said in a statement to the Tokyo Stock Exchange that it is considering "all options" regarding the subsidiary.
The statement was issued in response to a report in the Friday morning edition of The Nikkei newspaper that said Hitachi is in talks with U.S. investment fund Silver Lake over the sale of just under half the company. The Nikkei said that the two parties are trying to come up with a deal by January however agreement remains some way off because there are disagreements on price.
Hitachi declined to comment beyond its statement.
Despite coming up with several market-leading drives, such as the first terabyte hard-disk drive at the beginning of this year, the company hasn't yet been able to make a profit under Hitachi's ownership. It is the third-largest manufacturer of hard-disk drives behind Seagate and Western Digital.
Hard-disk drive makers have been enjoying better business conditions in the market in the second half of 2007. Early in the year prices fell about 20 percent per quarter but those sharp price declines have now steadied and prices dropped just 5 percent in the fourth quarter, according to a recent report from iSuppli.
The research agency said worldwide shipments of drives hit 132 million units in the third quarter, a 15 percent jump from the 115 million shipped in the second quarter. It predicted the seasonably strong fourth quarter will see a further 11 percent jump in shipments from the previous quarter.
IBM buys in-memory database company Solid
IBM is buying Solid Information Technology, a maker of high-performance databases and a close partner of IBM rival MySQL.
Solid makes an embedded database with an in-memory database engine, which means it can store and retrieve data from main memory, giving faster performance than traditional disk-based systems.
That makes it popular for applications that require very fast processing times, such as routing calls in a phone network or trading stocks. Solid's customers include Cisco Systems, Siemens, TeliaSonera and Nokia, according to its Web site.
IBM agreed to acquire the company for an undisclosed sum and expects the deal to close in the first quarter of 2008, IBM announced Friday. It said the deal will enhance its database line-up by adding real-time data access capabilities. IBM rival Oracle acquired an in-memory database two years ago, from TimesTen.
The IBM acquisition may be seen as a setback for MySQL, since it marks the loss of independence of another company that makes a high-performance transaction engine for MySQL's database.
Two years ago Oracle bought Innobase, which made the most popular MySQL transaction engine. Oracle continues to license InnoDB to MySQL, but the acquisition prompted MySQL to look for alternatives.
One of those was Solid, which joined MySQL's storage engine certification program and released an open source version of its database engine for MySQL. IBM did not say in its statement if it would continue to develop the MySQL product.
However, MySQL is also developing its own transaction engine, so in the long term it will be less dependant on partners. Called Falcon, the engine is due to ship with MySQL 6.0, which is due for wide release late next year.
The acquisition of Solid is IBM's twelfth acquisition this year, it said.
Solid makes an embedded database with an in-memory database engine, which means it can store and retrieve data from main memory, giving faster performance than traditional disk-based systems.
That makes it popular for applications that require very fast processing times, such as routing calls in a phone network or trading stocks. Solid's customers include Cisco Systems, Siemens, TeliaSonera and Nokia, according to its Web site.
IBM agreed to acquire the company for an undisclosed sum and expects the deal to close in the first quarter of 2008, IBM announced Friday. It said the deal will enhance its database line-up by adding real-time data access capabilities. IBM rival Oracle acquired an in-memory database two years ago, from TimesTen.
The IBM acquisition may be seen as a setback for MySQL, since it marks the loss of independence of another company that makes a high-performance transaction engine for MySQL's database.
Two years ago Oracle bought Innobase, which made the most popular MySQL transaction engine. Oracle continues to license InnoDB to MySQL, but the acquisition prompted MySQL to look for alternatives.
One of those was Solid, which joined MySQL's storage engine certification program and released an open source version of its database engine for MySQL. IBM did not say in its statement if it would continue to develop the MySQL product.
However, MySQL is also developing its own transaction engine, so in the long term it will be less dependant on partners. Called Falcon, the engine is due to ship with MySQL 6.0, which is due for wide release late next year.
The acquisition of Solid is IBM's twelfth acquisition this year, it said.
Russians close to prosecuting 'Pinch' Trojan authors
Russia may soon prosecute the authors of the "Pinch" Trojan, an easy-to-use malicious software program available on the Internet that steals a variety of data.
Nikolay Patrushev, who heads Russia's Federal Security Services, said earlier this week that Pinch's authors had been identified and would be taken to court, according to a blog posting by Russian security vendor Kaspersky Lab.
Kaspersky said the arrest of the Pinch writers, identified as Ermishkin and Farkhutdinov, would be on the same level as the 2005 prosecution of German Sven Jaschan for creating the NetSky and Sasser worms, which caused thousands of infected computers to crash worldwide.
With Pinch, "it's impossible to estimate what financial losses have been caused over the years since this Trojan first saw the light of day," Kaspersky said.
Pinch's sellers would customize the program for buyers and offer support, illustrating a growing underground economy for hacking tools, Kaspersky said.
Thousands of versions of Pinch, which comes in Russian and English language versions, are still circulating on the Internet. Kaspersky said its security software can detect some 4,000 variants of Pinch, where the basic code is the same but aspects of the program have been modified in order to evade detection by security software.
Pinch has a highly-developed user interface that can be used for sorting information it steals off other computers, according to F-Secure.
It can steal e-mail account passwords, pilfer other password information stored in the Internet Explorer, Firefox and Opera browsers, and snap screenshots.
That stolen information can also be encrypted before it is sent back to the hacker, according to Panda Security, another security vendor.
Pinch could also be customized to have the victimized computer join a botnet, or a network of computers set up to hide other malicious activity by the hacker. Botnets are often used to send spam or mount other hacking attacks.
Nikolay Patrushev, who heads Russia's Federal Security Services, said earlier this week that Pinch's authors had been identified and would be taken to court, according to a blog posting by Russian security vendor Kaspersky Lab.
Kaspersky said the arrest of the Pinch writers, identified as Ermishkin and Farkhutdinov, would be on the same level as the 2005 prosecution of German Sven Jaschan for creating the NetSky and Sasser worms, which caused thousands of infected computers to crash worldwide.
With Pinch, "it's impossible to estimate what financial losses have been caused over the years since this Trojan first saw the light of day," Kaspersky said.
Pinch's sellers would customize the program for buyers and offer support, illustrating a growing underground economy for hacking tools, Kaspersky said.
Thousands of versions of Pinch, which comes in Russian and English language versions, are still circulating on the Internet. Kaspersky said its security software can detect some 4,000 variants of Pinch, where the basic code is the same but aspects of the program have been modified in order to evade detection by security software.
Pinch has a highly-developed user interface that can be used for sorting information it steals off other computers, according to F-Secure.
It can steal e-mail account passwords, pilfer other password information stored in the Internet Explorer, Firefox and Opera browsers, and snap screenshots.
That stolen information can also be encrypted before it is sent back to the hacker, according to Panda Security, another security vendor.
Pinch could also be customized to have the victimized computer join a botnet, or a network of computers set up to hide other malicious activity by the hacker. Botnets are often used to send spam or mount other hacking attacks.
Sharp and Toshiba to team up on LCD TV screens and chips
Sharp and Toshiba plan to closely cooperate in the flat-panel TV business, buying screens and semiconductor chips from each other, they said Friday.
Toshiba will turn to Sharp for the 32-inch and larger flat-panel displays used in its LCD (liquid crystal display) televisions while Sharp will procure from Toshiba the chips used in its TVs. The cooperation will begin during the year from April and will slowly build towards 2010 when two goals are expected to be reached: Sharp will supply Toshiba with 40 percent of its LCD modules and Toshiba will sell to Sharp 50 percent of the chips it needs.
The deal provides both companies with a steadier supply of vital components for LCD TVs. The market for such televisions has grown from 161 million units in 2003 to an estimated 192 million this year and is expected to keep on rising on the back of strong demand and competition.
Some of the display panels headed for Toshiba will come from a state-of-the-art ¥380 billion (US$3.36 billion) LCD manufacturing plant Sharp is building in Osaka's Sakai City. Production is scheduled to begin in 2009. The plant will handle mother glass -- the large sheets on which several display panels are made -- of 2.85 meters by 3.05 meters. This size, dubbed 10th generation, is larger than that used by any other display manufacturer and will make the Sakai plant the world's most advanced LCD production center.
The large glass sheets also bring a cost advantage for Sharp. The per-inch price of LCD panels drops with increases in the size of mother glass, so the panels are likely to be more competitive than those from rivals. That's especially important in the TV market, where strong competition has made price a key to success.
Toshiba currently holds a stake in IPS Alpha Technology Ltd., an LCD manufacturing joint venture created with Panasonic and Hitachi. The IPS line uses an older 6th-generation technology and will need substantial investment if it is to remain competitive in the market.
Toshiba will turn to Sharp for the 32-inch and larger flat-panel displays used in its LCD (liquid crystal display) televisions while Sharp will procure from Toshiba the chips used in its TVs. The cooperation will begin during the year from April and will slowly build towards 2010 when two goals are expected to be reached: Sharp will supply Toshiba with 40 percent of its LCD modules and Toshiba will sell to Sharp 50 percent of the chips it needs.
The deal provides both companies with a steadier supply of vital components for LCD TVs. The market for such televisions has grown from 161 million units in 2003 to an estimated 192 million this year and is expected to keep on rising on the back of strong demand and competition.
Some of the display panels headed for Toshiba will come from a state-of-the-art ¥380 billion (US$3.36 billion) LCD manufacturing plant Sharp is building in Osaka's Sakai City. Production is scheduled to begin in 2009. The plant will handle mother glass -- the large sheets on which several display panels are made -- of 2.85 meters by 3.05 meters. This size, dubbed 10th generation, is larger than that used by any other display manufacturer and will make the Sakai plant the world's most advanced LCD production center.
The large glass sheets also bring a cost advantage for Sharp. The per-inch price of LCD panels drops with increases in the size of mother glass, so the panels are likely to be more competitive than those from rivals. That's especially important in the TV market, where strong competition has made price a key to success.
Toshiba currently holds a stake in IPS Alpha Technology Ltd., an LCD manufacturing joint venture created with Panasonic and Hitachi. The IPS line uses an older 6th-generation technology and will need substantial investment if it is to remain competitive in the market.
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