Young Investor

UNDER THE RADAR: TECH CHAOS

ADARSH GOPALAKRISHNAN | Updated on September 24, 2011

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The week saw news headlines being hogged by the continuing Eurozone crisis and scepticism over the US Fed's latest efforts labelled ‘Operation Twist' to revive the ailing US economy. However, there were some seismic shifts underway in the technology world which simply got a passing mention amidst the hue and cry of the stock markets.

The week, in fact, saw a series of announcements by biggies such as Google, Facebook, Hewlett Packard and Microsoft.

A bad week

A series of embarrassing memo-leaks and three earnings downgrades later, Hewlett Packard's board decided to give it's CEO (now ex-CEO) Leo Apotheker the boot and appointed former head of EBay and board member Meg Whitman as its new CEO. The company has gone through a torrid year on the bourses, its shares dipping 47 per cent.

The list of investor annoyances which led to Apotheker's exit after a mere 11 months included his botched attempt to articulate a post-PC vision for HP. This entailed spinning off PC's, discontinuing tablets and focusing on the enterprise segment (including what is seen as an expensive $10.3-billion deal for a small enterprise software-maker).

Meanwhile, Google found itself in a tight spot as US senators grilled the company's chairman Eric Schmidt.

The company is being investigated over allegations of abusing its dominant position in the web-search to unfairly pitch its own businesses to consumers ahead of competitors. Schmidt put up a strong defence in which he invoked old-foe Microsoft, “Twenty years ago, a large technology firm was setting the world on fire. Its software was on nearly every computer. Its name was synonymous with innovation, but that company lost sight of what mattered. Then Washington stepped in.” He then assured senators that Google would not be going down Microsoft's road.



Battle of the social networks



Google opened up its social networking foray, and Facebook rival, Google+ (Google Plus) in an effort to ensure it avoids the money-trap which Microsoft's online and mobile device offerings have become. Invitations are now no longer needed to sign up to Google+.

The foray has met with limited success, racking up 20 million users, though it sparked a slew of revamps and new tie-ups from Facebook.

The eponymous social network announced a bunch of new features which notably change the look and functionality of its site and evoked the usual cries of privacy infringements from several users.

Facebook also looked to ramp-up its media content through tie-ups with Swedish online-music distributor Spotify and movie-distributor Netflix which is the largest movie-rental service in the US.

But Facebook's new partner also had quite a bit of explaining to do. An abrupt sharp hike in fees to watch movies online and rent them forced Netfilx CEO Reed Hastings to issue an apology. But he followed up with a move which had markets and consumers fuming.

Hastings split the online viewing and DVD rental businesses into two separate entities. The move is expected to provide the online viewing entity more firepower and focus to expand content and services (the Facebook tie-up being a major step) without being distracted by the DVD rental arm which is now seen as a sunset segment.



Published on September 24, 2011

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