News Blog

Six technology heavyweights came together Monday to announce an alliance to jointly license patents for the broadband wireless technology WiMax.

The group, which calls itself the Open Patent Alliance, includes Intel, Cisco Systems, Samsung Electronics, Sprint Nextel, Clearwire, and Alcatel-Lucent. The intent of the group is to gather rights to WiMax patents and license them to makers of consumer electronics devices, networking equipment, and computers.

During a Webcast Monday, executives from each of the six companies emphasized the openness of the alliance that was being created. And the companies said they hoped other companies would join the group.

"As a founding member of the alliance, our role is to work with different vendors and evangelize the benefits of an open model," said Sriram Viswanathan, general manager for WiMax at Intel Capital. "We will invite others to join and try to influence players who are whetted to other models to understand the benefits of openness."

WiMax is an IP-based wireless technology that offers high-speed Internet access similar to speeds delivered through Wi-Fi, a short-range wireless technology that uses unlicensed spectrum. So far the technology, which was standardized a couple of years ago, has been used mostly in the developing world to provide fixed wireless broadband.

Now companies such as Intel, Sprint Nextel, and Clearwire are pushing mobile WiMax to bring true broadband wireless to MP3 music players, gaming devices, smartphones, and a plethora of other consumer electronics devices.

Sprint Nextel and Clearwire announced earlier this year they are joining forces to complete the construction of a nationwide WiMax network in the U.S. And Intel already has plans to embed WiMax chips into its Centrino laptop chips. Samsung, Cisco, and Alcatel-Lucent have already been developing infrastructure equipment for WiMax networks.

But these companies all agree that for WiMax to be successful a more robust ecosystem is needed. The OPA is meant to encourage this ecosystem primarily by making WiMax-related patents inexpensive and accessible to anyone.

This is different than the cellular model, in which companies such as Qualcomm, Nokia, and Ericsson have separately developed technology and charged patent royalties for 3G products.

Cell phone makers can spend more than 25 percent of developing a new product on licensing underlying wireless technologies, according to a Wall Street Journal article. Intel's Viswanathan said these high royalties are to blame for stifling innovation. He said that cellular chips have not expanded to other devices such as cameras, music players, or gaming devices because of the high cost of licensing patents.

"We haven't seen a broad proliferation of cellular technology in anything other than handsets because the model is closely held and restrictive," he said.

A similar open patent strategy was devised in the video industry for video compression technology.

That said, WiMax faces many challenges. For one, Sprint Nextel and Clearwire are the only major carriers building a WiMax network in the U.S. The nation's two largest cell phone operators, AT&T and Verizon Wireless, have already said they plan to use a competing technology known as LTE.

Still, WiMax backers say that WiMax has at least a three-year time to market advantage since LTE hasn't even been standardized yet. Intel, which plans to include WiMax in its Centrino platform, says it expects to seed the market quickly.

Every so often, I wonder if Silicon Valley is all it's cracked up to be. Sure, the confluence of venture capital, universities, and lawyers make it a veritable petri dish for the formation of technology companies, but there are a lot of other great places for innovation, right?

Well, if you go strictly by market capitalization, and look at the top 10 information technology companies, 6 of them are based in Silicon Valley: Cisco Systems, Google, Intel, Hewlett-Packard, Apple, and Oracle. In fact, if you map these company's headquarters, they'd all be inside a circle with a radius of just 10 miles. Amazing, when you think about it.

And these companies are far from just "headquartered" in Silicon Valley.

Google and Apple are very much centralized from a product and technology development standpoint.

Intel has research-and-development facilities in Oregon, Arizona, and Israel, but a significant amount of its R&D occurs at or near its Santa Clara, Calif., headquarters. The same is true of Cisco, though the networking giant owns several large subsidiaries--such as Scientific Atlanta--that are based elsewhere. Likewise for Oracle.

HP is somewhat more diversified, with product development for its Compaq unit in Houston, plus R&D facilities in Idaho, Oregon, and additional cities around the globe. But still, more of its R&D occurs in northern California than anywhere else.

Three of the four companies not based in Silicon Valley have research and development consolidated near their corporate headquarters: Microsoft in Redmond, Wash.; Qualcomm in San Diego; and Nokia in Finland.

IBM, on the other hand, is the most distributed company of the 10, with R&D facilities in New York, Massachusetts, Vermont, North Carolina, Texas, Minnesota, and a number of international locations, including London.

What does all this mean? Well, the data's essentially useless, unless you compare these companies to the same group, say 5 or 10 years ago. Luckily, I've got a good memory. It's not necessarily obvious from the data, but there does appear to be a trend toward more distributed R&D among large companies--if not domestically, then certainly internationally.

Although there are a number of new and growing U.S. technology hubs, none appears to be in a position to unseat Silicon Valley as the tech mecca.

Internationally speaking, China, India, Israel, Japan, and the United Kingdom each have technology development centers with tremendous growth potential. South Korea and Taiwan are nothing to sneeze at, either. Sure, they all have a way to go to match the confluence of resources and talent that Northern California offers. But the trend is there.

And while our qualitative analysis consists only of 10 companies, I do believe that it represents the industry as a whole.

In summary, as information technology penetrates further into the lives of more and more people, it stands to reason that innovation hubs will become more and more geographically distributed, if not also technically specialized.

And someday, a new technology may take root and ultimately supplant electronics as the driver of human innovation. It might be a form of biotechnology, nanotechnology, or something else entirely. In that case, all bets are off.

Updated 5/29/08 12:23 PM - Modification to paragraph on Intel R&D.

CIO.com's James Turner has reported on a big, new development from Cisco Systems: the announcement of Etch, a "messaging protocol intended to allow developers to integrate client/server applications without the overhead of traditional protocols such as SOAP."

The biggest part of the release, however, is that it will be open source.

Like Facebook's Thrift messaging protocol, Cisco's open sourcing of Etch probably has less to do with any corporate love for open source than with a realization that the most viable way to take on an incumbent in an established software market is with open source. Open source enables a company to potentially disarm competing technologies through a bottom-up infiltration of the market.

Proprietary software is a way to guard one's position. Open source is a way to create a new position. Cisco's Etch is just one more reminder that many, if not most, new entrants to a crowded market will be open source. Whether they remain as such, however, is an entirely different question.

Senators Tom Coburn (R-Okla.) and Dick Durbin (D-Ill.) discuss their concerns about Internet censorship by foreign countries, including China. Chinese authorities serve up the cartoon cops (pictured here) on its citizens' screens from time to time as reminders that they're being monitored.

(Credit: Anne Broache/CNET News.com)

WASHINGTON--Senators on Tuesday pressed executives from Yahoo, Google, and Cisco Systems to justify their business practices in China and other Internet-censoring countries, with Cisco in the hot seat over new allegations of cozier-than-confessed ties with the Chinese police.

Sen. Richard Durbin (D-Ill.), who led the morning hearing in the Senate Judiciary Committee's human rights panel, said he is actively considering whether to draft new legislation that, similar to a pending House of Representatives proposal, would place a host of new restrictions on American companies doing business in Internet-restricting countries.

Durbin said he appreciates the efforts of American companies to promote free expression in otherwise oppressive countries but believes some are falling short on those pledges.

"Perhaps it's time for Congress to consider converting this moral obligation into a legal obligation," he said.

Still, the event lacked the pervasive finger pointing and name calling that punctuated two previous hearings about similar topics in the House of Representatives during the past two years.

Durbin set the tone for the less antagonistic hearing, which lasted barely two hours and counted only three politicians present at its most crowded, by saying up front: "This is not a black and white issue, and this is not an easy issue. U.S. technology companies face difficult challenges when dealing with oppressive governments."

Cisco and China: Censorship collaborators?
Two human rights activists present at the hearing, however, said it's clear that the companies aren't doing nearly enough to resist demands that they censor their services and called for new legislation to address that issue.

Cisco general counsel Mark Chanlder listens to Shiyu Zhou, a Chinese human rights activist, after Tuesday's hearing. Zhou says internal documents show Cisco has been assisting the Chinese government's censorship aims, which the company denies.

(Credit: Anne Broache/CNET News.com)

Although Yahoo has arguably faced the most protracted scrutiny from politicians at previous hearings, Cisco endured the bulk of the questions this time.

A portion of the hearing focused on a 2002 internal Cisco presentation, which was provided to the subcommittee by Shiyu Zhou, deputy director of a group called the Global Internet Freedom Consortium, which creates technological tools designed to circumvent censors. In Zhou's view, the 90 PowerPoint slides, which Cisco says were produced by a lower-level Chinese employee working in China, suggest the company assisted the Chinese government in meeting its censorship aims, although Cisco vehemently denied those allegations.

The slides--a translated copy of which was provided to CNET News.com--include descriptions of the Chinese government's so-called "Golden Shield Project," which is responsible for operating China's "great firewall." One slide lists one of the project's main objectives as monitoring and controlling the Internet to combat the "Falun Gong evil cult," a spiritual practice that the Chinese government has persecuted.

Another slide lists planning, construction, technical training, and maintenance as "opportunities" for Cisco, which Zhou argues "flatly rebut(s) Cisco's repeated and self-serving claims" that it has sold the same generic routers and other equipment to China as to any other government and does not in any way assist with its censorship goals. Zhou said he provided the subcommittee just before the hearing with another presentation that offers additional evidence to that effect.

Cisco general counsel Mark Chandler attempted to defuse those allegations, saying he was "appalled" to see the anti-Falun Gong line included in the presentation. He denied once again that his company has participated in any way in the Chinese government's censorship activities, saying Cisco does not customize its equipment to meet those aims.

"We disavow the implication that this (presentation) in any way reflects Cisco's views," Chandler told the committee.

Durbin called the presentation "troubling" and asked Chandler to explain what policies Cisco has in place to make sure its employees don't cooperate with foreign censors.

Chandler said the company has an "extensive written code of conduct," and "employees who would customize our products in such a way as to undermine human rights would not be consistent with the code of conduct." He added that Cisco isn't sure exactly what devices the Chinese government uses to monitor and filter its network but believes the Chinese government itself has devised those tools.

An industry code of conduct
As they have done in the past, executives from Google, Yahoo, and Cisco each defended their current practices, saying they have no choice but to comply with the law in the countries where they operate. But, on the whole, they said they firmly believe the presence of their technologies does more good for the people of the countries who can access it, even if it's used in a restrictive way, than would the utter absence of their services.

"It isn't perfect, as we know, that but we do think that something about being there is right," Google deputy general counsel Nicole Wong told the subcommittee.

Durbin voiced some skepticism about that argument. "When you are asked to be complicit through your companies in restricting the flow of information for the public good and the public health, aren't your hands a little dirty at the end of the day if you participate in that?" he asked the companies.

As Durbin sees it, there are two areas of concern: when companies censor information, such as search results, based on government requests; and when they turn over private information about subscribers in response to government requests related to activities that wouldn't be illegal in the United States.

The Illinois Democrat cited Google and Yahoo's censorship of search results on their Chinese search engines, as required by Chinese officials, and grilled Yahoo deputy general counsel Michael Samway over Yahoo China's decision a few years ago to turn over information about dissident writer Shi Tao that led to his imprisonment.. (Yahoo, for the record, currently owns a minority stake in Yahoo China.) Rather than hinting more closely at what sort of legislation he has in mind, Durbin stuck to asking broad questions.

"Should we declare it wrong for an American company to in any way cooperate with censorship and repression?" Durbin asked.

Wong, Chandler, and Samway each reiterated their calls for additional help from the government, whether through trade negotiations or new legislation, to protect their operations in countries where legal standards differ dramatically.

They also pointed to their efforts during the past 18 months to begin working out a solution on their own, by devising industry standards for dealing with such countries, in conjunction with human rights organizations, socially responsible investors, and academics. The companies said agreement is on the way, although a Human Rights Watch representative, Arvind Ganesan, seemed somewhat less optimistic about the companies' willingness to have their overseas practices monitored by a third party, as human rights activists have proposed.

Durbin questioned why the code of conduct hasn't been completed sooner, challenged each of the representatives present "to no longer tolerate the delay," and warned that Congress would be monitoring their progress closely.

"I hope within the next 48 hours we'll have an announcement," Durbin said, referring to the code of conduct. "That would be terrific."

Network equipment maker Cisco Systems introduced a simpler, cheaper version of its high-end video conferencing system on Monday.

The new Telepresence System 500 is a less expensive version of the telepresence product Cisco launched in 2006. Cisco's telepresence system was developed using high-definition screens and cameras, array speakers, and high-speed Internet connections to provide crystal clear video conferences that could replace the need for executives to travel halfway around the world to meet with colleagues, partners, or customers. The idea is that if companies can conduct business virtually they can save a whole lot of money on traveling.

Cisco TelePresence 500

(Credit: Cisco Systems)

Video conferencing has become a big part of Cisco's strategy moving forward. Last year, the company acquired online video and audio conferencing company WebEx. While WebEx allows for video conferences to be launched straight from the desktop, it's not meant to replicate in-person meetings. Still, it fits into Cisco's overall strategy, which is to improve worker productivity by allowing people in different locations to collaborate using the Internet.

The original version of the telepresence product was developed for small groups. It requires an entire room be dedicated to setting up the system, and it is expensive. The latest version of the product is expected to appeal to a broader audience and is designed to be used by one person.

The TelePresence System 500 integrates a 37-inch display, camera, microphone array, speakers, and specially designed lighting in a unit that can be placed on a desk, mounted on the wall, or stood on a pedestal in a private office. It will cost $33,900, which is less than half the cost of the most basic version of the TelePresence 1000, which was designed for about two people to a unit.

In addition to taking telepresence down to the personal level, Cisco introduced a version of the product that can accommodate larger groups of people. The Cisco TelePresence 3200 is designed for up to 18 people and is a step up from the TelePresence 3000, which was designed for six people. The 3200 version will cost $340,000, compared with $299,000 for the 3000.

Cisco TelePresence 3200

(Credit: Cisco Systems)

The company said the new Cisco TelePresence 3200 is ideal for company headquarters or large regional offices where large teams need to collaborate. It also is good for remote training.

Cisco has had good success with its TelePresence offering so far. And last month Cisco said it was teaming up with AT&T to jointly sell its telepresence products.

Cisco competes with a slew of companies in this market, including Hewlett-Packard, Polycom, and Teliris. Verizon Business, a unit of Verizon Communications, also sells a video conferencing service.

On Monday, Teliris announced a product designed for "personal" telepresence. Its product lists for $32,500. It also introduced a version for larger groups, which includes two or three screens. It costs between $99,000 and $125,000 and does not require a separate room dedicated to the system.

Network equipment maker Cisco Systems beat analyst expectations when it reported earnings Tuesday, but its lukewarm guidance showed that the slowing U.S. economy is still impacting the company.

Cisco, the world's largest supplier of equipment that shuttles traffic around the Internet, reported a net profit for the fiscal quarter of 2008 of $1.8 billion. This was down from profits of $1.9 billion in the same quarter a year ago, but it still beat analyst expectations.

Revenue for the quarter was up 10.4 percent to $9.8 billion. The company had forecast an increase in revenue of 10 percent.

Analysts believe that Cisco's results mean the company's business is stabilizing. But the sagging economy will still continue to impact its earnings for the next few quarters.

Last quarter, CEO John Chambers said the company was seeing a slowdown in technology spending in Europe and the U.S. And he predicted it would take two to five quarters for things to rebound.

On Tuesday's conference call, Chambers said that spending in the U.S. is still tight. And he anticipated that budgets will be constrained through at least the next two quarters. He said the company will likely see sales growth in the 9 percent to 10 percent range in the quarter that ends in July. But he maintained that the company's long term forecast of 12 percent to 17 percent revenue growth is still doable, indicating that he thinks the slump will be short-lived.

Sometimes I'm so uninspired I can't come up with a decent blog post to save my life. When that happens, I turn to what comforts me: numbers. Yes, I know how weird that sounds. What can I say, I'm a geek.

Anyway, I just got to wondering how investors in various technology companies fared over the long haul. I was just as interested in how technology companies performed versus companies with a more traditional business model. ... Read more

Cisco Systems said Monday that it's added to its arsenal of data center technology with a new switch and the purchase of start-up Nuova Systems.

Cisco, which already owned 80 percent of Nuova, worked with the start-up to build the new Nexus 5000. On Monday, Cisco introduced the new switch, and also announced that it has bought the remaining 20 percent of the start-up.

Cisco announced its $70 million investment in Nuova in 2006. The company didn't disclose details of the current buyout. But in April of last year, it expanded its funding agreement and raised the maximum potential payout of the transaction to $678 million.

Cisco will continue to use the Nuova technology to further develop and expand the Nexus product line, a new line of data center switches the company introduced earlier this year. The first product in the line was the Nexus 7000. The Nexus 5000 will provide a smaller, fixed version of the product.

The new Nexus switches combine Ethernet switching, IP routing, storage, and security into a single device. And while these switches don't necessarily take over the functions of servers or storage area devices in the data center, they will allow companies to use their servers and storage devices more efficiently.

Cisco has spent more than two decades building its brand as a switching and routing powerhouse. Now, it is tackling the data center, where it hopes its Nexus products will dominate. These new switches are expected to become the next high-ticket item Cisco can sell to large companies to help fuel the company's growth. Cisco hopes the data center will be worth about $10 billion over the next five years, which means it is a key opportunity for a company that needs to grow at least between 10 percent and 15 percent a year to satisfy Wall Street.

But Cisco's move into the data center could pit it against some of its largest partners, such as IBM, Hewlett-Packard, and EMC. Cisco claims its products complement products from these companies. IBM and Hewlett-Packard are more server-centric. And EMC is more focused on the issue from a storage angle. Meanwhile, Cisco sees the intelligent network, with its Nexus 7000 sitting in the center, as the best answer for virtualizing the data center.

Still, competing with its partners is starting to become a familiar tune at Cisco, which has found itself also competing head-to-head with software giant Microsoft in some areas of its business.

A recent libel lawsuit filed against Cisco Systems over one of its employees' personal blogs could spur companies, many of which have encouraged workers to share their writings publicly, to reconsider how much latitude to give them.

Thousands of companies have embraced the idea of giving employees an unfiltered voice as a means to keep in touch with customers, suppliers, and the media. Sun Microsystems boasts a 4,000-employee-strong blog network, including its chief executive, and some corporate "spokesbloggers" like Microsoft's Robert Scoble have even rocketed to Internet stardom.

Cisco's legal trouble stems from a Blogspot-hosted blog called Patent Troll Tracker, which Rick Frenkel, who directs the company's intellectual property department, launched last May. His posts focused on patents and patent litigation--an issue that Cisco has pressed Congress to address by overhauling what it views as a broken U.S. patent system.

A few weeks ago, Frenkel revealed his identity, and two patent attorneys in Texas filed suit, accusing him of tarnishing their good names and disparaging a patent case their client had filed against Cisco--all the while allegedly concealing his affiliation with the company.

Cisco has responded by rethinking how it does blogging. Now the Patent Troll Tracker posts appear to be open only to invited readers. Although the company says it's standing by Frenkel and allowing him to continue his personal blog, the incident also highlighted a number of important "lessons," Cisco said in a statement--including the potential perils of unchecked anonymous blogging.

Cisco said it still believes "common sense" should be a guiding force for employees sharing information online, but it also added the following rule to its three-year-old Internet postings policy: "If you comment on any aspect of the company's business or any policy issue the company is involved in where you have responsibility for Cisco's engagement, you must clearly identify yourself as a Cisco employee in your postings or blog site(s) and include a disclaimer that the views are your own and not those of Cisco."

Although it wasn't a surprising move, it also may discourage other employees, said Denise Howell, an intellectual property and technology lawyer based in Newport Beach, Calif., who has written about corporate blogging policies.

"It helps show what expectations are for the company," she said, "but it's telling everyone else, 'Gee, we think you're just as big a risk as this guy.'"

Sun Microsystems, Yahoo, Google, Dell weigh in
To be sure, it's still the exception, not the rule, for companies to have rules governing blogging in the first place. But among those who do, not all of them make it absolutely mandatory to disclose one's corporate affiliation.

Sun Microsystems, which hosts blogs from CEO Jonathan Schwartz and some 4,000 other employees, has had a blogging policy in place since 2004. It broadly prohibits discussing a wealth of "non-public" information, including financial data, code, personal information about other individuals, all manner of confidential information, and "work-related legal proceedings or controversies." (Click for PDF)

But unlike Cisco, Sun doesn't require bloggers to disclose that they work for the company, although Tim Bray, the company's Web technologies director, says he considers doing so "good practice."

Google similarly recommends, but does not require, such disclosures, said spokeswoman Sunny Gettinger. (Google said it has an internal "communications" policy but doesn't make it public, although its general employee code of conduct is.)

Yahoo is arguably even gentler, but its policy has "been successful in providing employees with guidance on blogging practices with respect to the company," said spokeswoman Nicki Dugan. Its guidelines, issued in 2005 (PDF), decree two main rules: don't reveal proprietary information, and be cautious about posting exaggerations, obscenities, or other characterizations that could invite litigation.

Under a separate list of not-mandatory guidelines, Yahoo employees who choose to identify themselves as employees of the company are told to consider telling their supervisors, but they're not required to do so, nor are they required to disclose that they work for Yahoo at all.

"If you're worried about what your mom, manager, ex-coworker, or Terry Semel would think, listen to that instinct," Jeremy Zawodny, one of Yahoo's best-known employee bloggers, wrote in a May 2005 blog post introducing the policy.

The BBC's blogging guidance actually carves out "blogs or Web sites which do not identify the blogger as a BBC employee, do not discuss the BBC, and are purely about personal matters" from its guidance.

Dell's stance is perhaps the most similar to--and predates--Cisco's. Bob Pearson, the computer maker's vice president of communities and conversations, said the company prides itself on being one of the first companies to release a "clear transparency policy."

That "online communication policy," released in November 2006, sets standards for employees when they're acting as "a delegate of the company."

Specifically, they're expected to disclose their association with Dell whenever they do any sort of blogging, social networking, Wikipedia entry-editing, or other online activities related to or on behalf of the company. If the subject matter crosses over into hobbies or people's personal lives, "there would be no rationale for us to get involved in that," Pearson said in a phone interview Tuesday.

Translation: "If someone is a fisherman and they want to talk about fly fishing outside of work, then that's not our business, it's personal," said Pearson. "But if someone is going to talk about notebooks and anything related to Dell, they have to say they're from Dell."

IBM also requires its employees to identify themselves and their roles with the company if they're blogging about company-related topics. Its lengthy guidelines began through a wiki process in spring 2005 and have been evolving since then.

Other companies were less forthcoming about what rules, if any, they have in place.

Apple and Symantec spokespeople declined to comment on whether they have employee-blogging policies and what they entail. An Adobe spokeswoman said the company "does have an active blogging community and asks those participating to adhere to Adobe's blogging guidelines," but she declined to share those rules. A McAfee representative said the company is in the process of "refreshing" its blogging guidelines--for undisclosed reasons unrelated to the Cisco incident--but declined to share any details about what's in place now.

Microsoft offers employees a list of frequently asked questions about how to apply existing company policies on confidentiality and other matters to the blogging world, but it doesn't make that public, a spokeswoman said. The gist of the guidance, though, is to be smart and use common sense, she said.

Any company that decides to adopt blogging policies should keep them short, clear, and to-the-point, said Howell, the online communications lawyer.

"I don't think you need to necessarily try to take into account every single specific situation that might come up in your blogging policy," she said. "You'll come up with something that's unreadable and draconian. No one will actually read it or respect it."