Bill Zhang

Thursday, December 29, 2005

Top 10 tech trends for 2006

Once again, it's time for SiliconValley.com's annual look into a crystal ball for technology trends in 2006. Never mind that the smartest people in tech wouldn't dare make serious predictions about what innovations will catch fire next year. We make a humble try anyway.
Video -- in the form of your favorite TV dramas or Hollywood hit movies -- will come to the big screen in your living room and to the small screen on your cell phone. Whenever you want it. No need to mess around with time-shifting TV devices or mail-order flicks.
Video comes to blogs to begat vlogs. For anybody who's getting tired of reading all those wordy blogs (short for Weblogs) posted on the Internet on every conceivable niche topic, video comes to the rescue. If a picture is worth a thousand words, video might be worth even more. Now anyone can subscribe to vlogs and have the latest installments automatically delivered to the computer desktop (and transferred to a portable player, such as the video iPod).
Meanwhile, Internet phone calls will become more common now that major Web companies Yahoo, Google and Microsoft are making it easier to call from your desktop computer.
For those of us who occasionally depart the virtual world for the real one, defending ourselves from all kinds of biological threats -- real or potential -- becomes a growth industry in 2006. Biotech companies step up to fight what could be the biggest threat of all, from nature itself -- bird flu. Other companies work to find a better, faster way to make vaccines for the wintertime flu that kills many thousands every year.
Wireless networks, already common, will spread so rapidly in 2006 that it will blanket entire cities like San Francisco and Philadelphia. Although WiFi will still dominate as the most common way to connect your laptop computer to the Internet, WiMax will emerge. Already being tested extensively in the United States and abroad, WiMax can carry Internet signals across miles, rather than hundreds of feet as with WiFi.Some predict we'll live in a world served by a global WiMax network that connects us all 24/7.
First there were WiFi hotspots, then hot zones. Now entire cities such as Philadelphia and San Francisco are working to offer free or cheap WiFi to all their residents in 2006.
WiFi is a network that provides wireless connections to the Internet, so that people can use their laptops or mobile Web phones almost anywhere. The cities' ambitious WiFi initiatives have some wondering whether WiFi will become akin to a public utility, and whether it's the government's role to administer it.
But Politics aside, WiFi coverage areas are expected to grow in 2006, especially in urban areas. Already, some are eyeing WiMax technology as the next step. WiMax networks, which are being tested in the United States and abroad, can carry Internet signals across miles, rather than hundreds of feet as with WiFi.
Most WiFi networks consist of thousands of transmitters installed on city streetlights. The transmitters pass data to one another and then out to the Internet using invisible, silent radio waves, in a system known as ``mesh networking.'' A mesh network is analogous to a fisherman's net laid over a city, where each knot is a transmitter. Anyone within a 250- to 500-foot radius of a transmitter can get on the Internet, provided their computer can send and receive WiFi signals.
WiFi's rapid expansion can be found right here in Silicon Valley, where Santa Clara, Cupertino and Sunnyvale have all been provided with WiFi by MetroFi, a mesh networking company based in Mountain View. Internet search giant Google has agreed to provide Mountain View's citizens with WiFi. Pretty soon a person won't need wires to get online from one end of Silicon Valley to the next.
2. Cell phones do everything
It used to be that only the high-end, tons-of-buttons smart-phones could handle any cell phone functions besides voice calls. But now, even much less expensive phones have cameras, Web access, instant messaging and e-mail.
The list of new features that $150-and-under mobile phones have or will have in a matter of months sounds a bit like the Ginsu knives commercial of old: It slices! It dices! Phones these days can play music, show television clips, swipe credit cards, scan product labels, act as debit cards, locate a person on a map, wire money to bank accounts and send video voice mail. Heck, They can even show full-length movies -- that's if anyone will want to stare at their phone for that long.
And as wireless Internet, or WiFi, networks expand in 2006, expect mobile phones to get on the WiFi train, too. Mobile device makers are already selling ``dual-mode'' phones that can work on cellular or WiFi networks, though such devices cost more than $600. Dual-mode phones would solve the problem of signals dropping or weakening when a caller walks inside a building. The idea is that you'd be able to start a phone call over a cell network outside, walk inside and continue that call over an indoor WiFi network.
3. Internet phone calls zoom become more popular now that major Web companies are making it easier.
Over the past year, Google, Yahoo and Microsoft have all added voice chatting to their instant messaging software, allowing ``buddies'' to make calls from one personal computer to another.
Yahoo announced earlier this month it planned to match the features pioneered by Internet phone-calling software Skype so that people could also make PC-to-phone calls in addition to PC-to-PC calls -- for prices cheaper than Skype's. Yahoo's actions will probably persuade even more non-geeks to make cheap Internet calls from their PCs. Voice chatting over the Internet has been around for years, but it's never been such a priority for well-known Web companies. Price wars -- such as Yahoo's -- as well as the increasing number of people who are ditching their traditional wired phone lines will push Internet telephony even further to the fore in 2006.
4. The office moves to the Web Documents, e-mail and spreadsheets move off your desktop computer to the Web.
A host of cCompanies big and small are building new ways to transfer the computer desktop experience onto the Web, and we expect that trend to accelerate in 2006.
On the small side, companies such as Writely, Jotspot and Silveroffice are demonstrating that creating word processing documents and spreadsheets can happen just as easily on the Web as on the desktop. And having the documents on the Web makes it easier for people to collaborate.
No more e-mail attachments. Taking the concept further, a company called Transmedia has fused together music, photo, video, e-mail, calendar and documents software all into one Web-based service that is accessible through an Internet browser.
Large Internet companies are making noise here, too. Google will work with Sun Microsystems on the open-source OpenOffice project, leading many to believe that the Internet giant is eyeing some Web-based office productivity software. And Microsoft is rolling out a service that will enable workers to collaborate on documents using the Web.
5. Stem-cell research advances despite legal challenges
Biotechnology companies will line up to harness the curative potential of stem cells in 2006.
California's $3 billion stem-cell research institute is expected to remain tied up in legal battles well into the spring from lawsuits. But if the lawsuits are thrown out and California's stem-cell money starts flowing in 2006, watch out. It is expected to trigger a stampede of scientists and businesses seeking a piece of the action.
Many people believe stem cells -- the building blocks for every tissue in the body -- can be manipulated to provide cures for Parkinson's disease, diabetes, spinal cord injuries and many other ailments. Major advances in understanding and using the cells were announced this year and more are expected in 2006, with so many researchers flocking to the field.
Despite recent announcements that South Korean researchers have faked their stem-cell data, most people think others will make progress in using stem cells to develop treatments.
6. Biotechs target flu vaccines
Companies will be working hard in 2006 to produce vaccines to thwart a possible worldwide bird-flu epidemic. They'll also look at better, faster ways to produce vaccines for winter flu.
Chiron of Emeryville won a $62.5 million federal contract in October to begin making a vaccine against the most virulent strain of bird flu, dubbed H5N1. And under President Bush's recently announced plan to spend $7.1 billion on bird-flu preparedness, an additional $3.6 billion would be allocated to develop vaccines and other treatments.
In addition, the federal government wants Chiron and other companies to make more vaccine to combat the common winter flu.
Health authorities are encouraging more Americans to get annual flu vaccinations. The government's goal is to get 150 million people vaccinated in 2010, nearly twice the number expected this year.
7. Even small start-ups go global
Three major forces are driving the rise of the mini-multinational -- start-ups that are launched from the get-go as global operations.
First, there's the promise of lucrative foreign markets, which are growing more quickly than in the United States. Some overseas opportunities are now even bigger than here, such as cell-phone sales in China.
Second, U.S. companies can lower their costs and boost profits more quickly by outsourcing work to places like China and India, where labor is cheaper.
Finally, the Silicon Valley model of nurturing start-ups has spread to other regions around the world. Venture capitalists are opening offices in those countries and are getting more comfortable with helping to nurture companies in those foreign markets.
Many companies, seeded by Silicon Valley venture capital firms, set up headquarters in the valley, where they employ high-end engineers, marketing professionals and senior management.
But they have major operations in Bangalore, India, or Shanghai, China, and increasingly elsewhere.
8. Video comes to the blog
Amanda Congdon is the irreverent face of one of the hot tech trends for the coming year: the vlog (that's a video Weblog, for you English speakers).
Congdon's send-up of television newscasts, Rocketboom, makes light of such broadcast staples as the local weather forecast. The ``whether'' man appears, in one recent episode, clad only in underwear and necktie, delivering the day's forecast hostage style.
He peels successive layers of surgical tape off his mouth to report the temperature (17 degrees), wind-chill (feels like 5 degrees) and comedy punch-line (``I'm not sure where I am'').
It has already achieved a level of Internet cult status.
Like podcasts, which exploded in popularity in the past year, anyone can subscribe to vlogs to have the latest installments automatically delivered to the computer desktop (and transferred to a portable player, such as the video iPod).
Sites such as Break.com bring together collections of amateur, short-form videos (mostly aimed at guys who never tire of seeing scantily clad women and videos that would qualify as outtakes from the movie ``Jackass''). Blinkx, meanwhile, lets you search through more than 1 million hours of mainstream newscasts from Bloomberg or Fox News.
We don't think this will replace television anytime soon. But it will clearly find an audience, either on portable devices like the iPod or on cellular phones.
9. On-demand video everywhere
From the big screen in your living room to the grab-your-bifocals-small screen on your cell phone, you'll be awash in video that you can watch, whenever you want it.
Cable television giant HBO has introduced HBO on Demand, which lets some digital cable subscribers summon episodes of original shows like ``Curb Your Enthusiasm,'' older movies, such as ``iI, Robot'' or special programs like Bill MahrMaher's comedy special, ``Victory Begins at Home,'' with thea touch of the remote control.
Meanwhile, a growing number of more popular and classic television shows are available for Internet download through Apple's online iTunes store for the video iPod.
And more Internet video services are in the works to bring movies to a growing array of portable video players, including Sony's PlayStation Portable.
Suddenly, TiVo and other time-shifting devices look as tired as the VCR.
10. Clean technologies
We'll see a continued push to invest in clean technologies in 2006.
The growing evidence of global warming, the stubbornly high price of oil and environmental disasters such as the chemical spill this month in China's southern Guangdong province are all forces driving demand for cleaner energy, better monitoring of energy and other chemical use, and easier ways to clean water.
It helps that some of the best-performing initial public offerings this year have been for solar companies, such as China's Suntech Power and Silicon Valley's SunPower.
Lately, Silicon Valley venture capital firms have stepped up the pace of their investments in the sector, including fuel cell, battery and solar technologies.
VC firms poured a record $425 million in investments into clean-tech start-ups during this year's third quarter, according to the Cleantech Venture Network.
Most venture capitalists expect the clean-tech investment wave to continue into 2006, in part because oil prices have stayed high long enough for many investors to consider this a long-term trend -- not just a passing fad.

Wednesday, December 28, 2005

Why China Is Tops in Tech Gear ?

You now have another reason to rail against China. On Dec. 12, the Organization for Economic Cooperation & Development (OECD) announced that China has surpassed the U.S. to become the world's No.1 exporter of tech gear.

The news rounds out a year when Chinese high-tech companies raised their profile worldwide: Lenovo, China's top computer brand, took over IBM's (IBM) PC division. Huawei Technologies, the leading Chinese telecom- and networking-equipment maker, accelerated its overseas expansion. And ZTE, Huawei's cross-town rival in the southern city of Shenzhen, won new customers in developing markets in Asia and Africa, while also teaming up with Cisco Systems (CSCO). Advertisement

What's behind this success? For Beijing's many critics in Washington, the answer is easy: China cheats. Whether it's by depressing its currency's value or by stealing and copying American ideas, the argument goes, the Chinese simply don't play fair. So, the critics reckon, it's no wonder China has become the world's biggest exporter of electronics. An unfair argument? Here's a look behind the hype to see what has driven China's climb.

Are all of those high-tech exports really Chinese? Or are they made by companies based elsewhere that have shifted manufacturing to China?
About 60% of China's exports come from foreign-invested enterprises, says Oded Shenkar, a professor at Ohio State University's Fisher College of Business and the author of The Chinese Century: The Rising Chinese Economy and its Impact on the Global Economy, the Balance of Power, and Your Job. "The reality is that the higher up you go on the technology ladder, the higher the proportion of foreign players," Shenkar says.

He notes that about one-third of China's $60 billion in foreign direct investment last year was for technology-manufacturing ventures. "If you talk about high-tech exports, a lot of it is driven by foreign companies." Not long ago, for instance, Taiwan was the global center for notebook PC manufacturing. Today, Taiwanese companies such as Quanta Computer and Compal Electronics are still leaders in notebooks, but all have moved their production to low-cost mainland factories near Shanghai and Hong Kong.

Aren't the Taiwanese the exception?
No. The same holds true for computer- and phone-makers from the U.S. Dell (DELL) produces PCs at a factory in the southeastern city of Xiamen not only for China but also for export to Japan. The U.S. giant is now building a second factory across the street from the first Xiamen plant. When that's completed, one plant in the complex will be producing machines solely for export.

And Motorola (MOT) has a total of $3.6 billion invested in China. It just opened a new facility in Chengdu, the capital of western Sichuan Province. And Moto has expanded its factories in Hangzhou, near Shanghai, and in Shenzhen, adjacent to Hong Kong. It's no wonder, then, that China is No. 1. Indeed, what's surprising is that it has taken so long for it to get to this position.

If so much of the money comes from abroad, are foreigners behind China's high-tech companies?
Most of the managers at the big-name Chinese IT exporters are locals who rose up through the ranks domestically. But for the smaller companies in booming sectors such as chip design and e-commerce, the entrepreneurs are Chinese who have studied in the West and returned to the mainland.

They're called "sea turtles," a pun on the Mandarin word for "returnees." Some 7.5% of the PhD degrees in science and tech in the U.S. are awarded to Chinese citizens, Shenkar says. And more of them are returning home after getting their degrees, now that there's more opportunity in China. Today, about 25% of the Chinese return, says Shenkar, up from 15% a few years ago.

Are Chinese winning the export game because they have an unfair advantage at home?
It used to be that some Chinese tech companies did do well locally because they enjoyed government backing. But the Chinese market for PCs, cell phones, and consumer electronics has become extremely open and competitive, especially in the four years since China joined the World Trade Organization.

Consider the cell-phone market. Dozens of different companies -- both foreign and domestic -- are vying for the attention of China's 400 million cell users. "The market is overpopulated with cell-phone brands," says Michael Tatelman, the Beijing-based general manager for North Asia of Motorola's mobile-devices division. "It's ripe for consolidation. Nowhere else in the world are there so many brands. The number of mobile-phone brands in the market is unsustainable."

How successful have Chinese tech brands been so far?
It's too early to give an answer on the Lenovo/IBM deal. But many other Chinese companies that have tried to leverage their domestic success to build a global business haven't exactly prospered. Phone makers Ningbo Bird and TCL have struggled this year as their market share for handsets inside China has plunged and high-profile plans to plant a flag abroad have fizzled.

France's Alcatel (ALA) pulled out of a joint venture with TCL this year, less than 12 months after forming the partnership. And TCL's TV joint venture with France's Thomson Multimedia (TMS) has had a difficult time getting started, too.

So in the Chinese cell-phone business, it's back-to-the-future time. Nokia (NOK) and Motorola are once again at the top of the heap, and the locals are foundering. Not that the foreigners want to seem like sore winners. "You will see some really strong China brands in this market, and some of them will go global," says a gracious Tatelman of Motorola. But before that happens, a lot of Chinese phone makers will likely go belly-up.

If the Chinese are so good at high-tech hardware, why isn't China also a software power?
One reason China ranks at the top of the tech-exporter list is that the OECD doesn't include software in its calculations. Throw that into the mix and China falls, because the mainland has no software companies that can compare to hardware powers such as Lenovo and Huawei. For years, Beijing has sought to build up the software industry. But with piracy rates of about 90%, it's monumentally difficult for software companies to make the kind of money they need to grow into global powers.

And it doesn't help that the country's rulers are so concerned about clamping down on dissenting voices. "China still has a problem with how it deals with information," says Shenkar. "When you devote a lot of energy to how you can use the Internet to control your population, maybe you don't think enough of how you can apply it in business."

In which areas may we see China next overtake the U.S. in tech exports?
The Chinese government wants a semiconductor industry. Right now, China depends on foreigners for most of its chip needs -- and on Intel (INTC) and AMD (AMD) for effectively all of its microprocessors. Beijing has been supporting the growth of local players, and China now has several foundries, or make-to-order chipmakers, that are winning business.

The biggest is Shanghai-based Semiconductor Manufacturing International Corp., which is listed on Nasdaq and now owns a big chip fab [factory]in Tianjin that used to be Motorola's (MOT). But the foundry business is rough, and with the industry going through a correction this year, it's been tough for anyone other than world leader Taiwan Semiconductor Manufacturing Co. to make money.

China is also trying hard to develop its own microprocessor, with engineers from the Chinese Academy of Science working on a project, code-named the Godson. AMD in October promised to transfer some microprocessor know-how to the Science and Technology Ministry and to Peking University [the school in the capital that still uses the old-fashioned way of Romanizing the name Beijing], but don't expect either AMD or Intel to face any serious competition from the Chinese for many years to come.

Top Security Trends for 2006

Security threats will become more sophisticated in 2006, keeping security startups and their customers on their toes.

2005 has been a banner year for cyber-villains. Thanks to hackers, some of the United States’ largest corporations, including financial services giant Citigroup and media powerhouse Time Warner, had sensitive data swiped from their supposedly secure databases.

Smaller companies weren’t immune this year either, with retailer DSW Shoe Warehouse and credit card processor CardSystems, bought by Pay Per Touch in October, both victims of cyber break-ins (see Credit Cards Bar CardSystems).

Data theft wasn’t the only danger in 2005. An Internet worm, Zotob, infected computers at media companies like CNN and financial behemoths like Visa in August. And email nuisances, spam and phishing, were also on the rise.

Will it get better in 2006? Not really, say security experts. In fact, the threats may get worse. That’s because just as security systems become more sophisticated, the threats will become more complex and innovative—all in an effort to stay a step ahead.

Looking forward, security experts see eight major trends in security in 2006. Among them, voice spam is expected to become a growing annoyance as VoIP applications become more widely used. Another concern: cyber-criminals will exploit the low levels of security in mobile communications to gain access to data in laptops and other devices.

Here are the security trends to watch for in 2006:

Phishing Frenzy

Phishing, the practice of sending fraudulent emails to encourage users to divulge personal or financial information, will increasingly target customers of smaller organizations in 2006. Until recently, phishing victims often received email purporting to be from large banks like Citibank and Bank of America or sites like eBay.

But these organizations are deploying greater security measures to combat phishing, forcing scammers to turn to smaller targets. Next year’s targets could include customers of, say, the local credit union, security experts said.

Scammers will aim for residents of a specific town posing as a local financial institution, local governmental organization, or university, predicts Joel Smith, chief technology office for AppRiver, a Gulf Breeze, Florida-based spam and virus filtering service provider (see Worm Poses as FBI or CIA Email).


“We are going to see more regionalized, localized targeting,” he said. “Scammers will look for subscribers of regional ISPs [Internet Service Providers] and send them emails purporting to be from the local credit union.”

For scammers, the upside with such targets could be a higher rate of return. “Small organizations or targets from smaller cities may not have been as exposed to the phishing spams as larger or technologically savvy groups,” says Mr. Smith.

Business Worm’s Rise

Before Zotob struck, computer attacks were often directed at home users. But this worm, which exploited a vulnerability in Microsoft’s Windows operating system, affected businesses, marking the rise of Internet criminals focused on financial gain (see Zotob Heralds Business Worm).

These attacks on businesses are expected to increase next year, said Bruce Schneier, founder and chief technology officer for security firm Counterpane Internet Security. These Internet criminals differ from the hacker hobbyists who were content terrorizing home users in several respects, he said.

“Hobbyist hackers looked for new and clever attacks, while criminals will use whatever works,” he said. “Hobbyists generally didn’t care who they attacked, while criminals are more likely to target individual organizations.”

The big concern? This new breed of cyber-thieves will target proprietary information like trade secrets, or personal data like social security numbers that can be sold on online black markets.

For businesses, the spread of this new breed of worms will mean they’ll have to tweak security policies to institute new security protocols that can react faster to threats.

Insider Threat

Many of the data leaks in 2005 may have stemmed from poor security measures. And while companies spend millions securing their networks from intruders, they often ignore one of the most likely sources of leaks: insiders or company executives who can inadvertently or deliberately leak information.

Many companies that have off-site call centers managed by third parties don’t routinely review their systems to stop leaks, said Joseph Ansanelli, privacy expert and chief executive officer of Vontu, a San Francisco-based company that works to prevent data loss.



Often overlooked, the insider threat will grow in 2006, forcing more companies to add a layer to their network that will monitor the information accessed and distributed by employees (see Q&A: Security Wonk Dan Verton).

Increasing Network Control

The threat of crooked insiders and more stringent compliance regulations will force companies to implement identity-driven networks that control who uses a network. Driving the change is legislation like Sarbanes-Oxley, which calls for specific security measures and complete visibility into network users, devices, addresses, policies, and activity.

The basic network identity services that exist today cannot meet the requirements, said Robert Thomas, president and chief executive officer for network security company, Infoblox.

“The anonymity associated with conventional network deployments has existed for years; however, the repercussions of that anonymity, increasing regulatory compliance pressures, and security concerns over the last year or two have dramatically raised the visibility around these issues and call for a new approach,” he said.

Wireless Security Focus

Hackers are finding it increasingly easy to steal information from devices that contain people’s private data, as a growing number have wireless capabilities, said security experts.

Wireless technologies like Wi-Fi may be more widespread, but many users are still ignorant about the security measures they must use on these networks to keep hackers at bay. Security experts see 2006 as the year when threats on wireless networks will come of age.

As Wi-Fi moves to airplanes, trains, and other public locations, cyber-criminals will seek to exploit the lack of knowledge about mobile security measures to gain access to user information. One prime target? Laptops carried by business users, said MessageLabs, which provides email security and management services.

Increased Security Legislation

Over the last two years, a number of states have enacted laws similar to one in California requiring companies to disclose security breaches to protect state residents from identify theft. In 2006, a federal law along these lines is a strong possibility, security experts said.



Other legislation in the federal pipeline includes a bill that would set standards on what is spyware, how these programs should behave, and what is deemed violations. Spyware are malicious programs that sneak into users’ computers and monitor their usage.

“The legislators will also continue to dictate what types of security measures must be taken in order to prevent unauthorized access to sensitive company information,” said Vontu’s Mr. Ansanelli.

Voice Spam Begins

The popularity of Skype and VoIP will lead to new forms of spam attacks next year, security experts predict. As VoIP applications become more widely used, there will be a rise in voice spam.

That’s because VoIP services lack strong encryption and they can become a target of scammers, said Information Risk Management, an independent security consultancy firm.

“Just as web users can be plagued by pop-up advertisements and spam email, it is expected that VoIP services will be the next target,” said the company in a report. “Users could find calls redirected or hijacked by advertisements.”

Though there are some security solutions for VoIP traffic and equipment, service providers will have to move in faster to nip the problem in its early stages.

Selling to SMBs

Of course, all these new threats can mean new business for security companies. Traditionally, security companies have focused on selling their products to bigger players as large organizations have big IT budgets that will let them spend on securing their networks. But as smaller firms become the targets of security attacks, security startups will pay more attention to them.

Companies offering managed security services, which involves outsourcing the needs to specialists rather than doing it in-house, will be best positioned to capitalize on this trend, security experts said.

In 2006, there’s likely to be a spike in small and medium businesses using managed security services hosted by security companies, said Brad Miller, chief executive officer of Perimeter Internetworking, a managed network security services provider.

This “enables SMBs for the first time to outsource their security and receive pre-integrated services and continuous updates at an affordable price,” said Mr. Miller. “They did not have this option before.”