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	<title>Brainstorm Tech: Technology blogs, news and analysis from Fortune Magazine &#187; Security</title>
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		<title>Making the iPhone work for business</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2008/03/05/making-the-iphone-work-for-business/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2008/03/05/making-the-iphone-work-for-business/#comments</comments>
		<pubDate>Wed, 05 Mar 2008 13:54:35 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
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		<description><![CDATA[By Jon Fortt and Michal Lev-Ram 
Will Apple give up some control over the iPhone in order to court corporate customers?
That’s one of the juiciest questions surrounding a gathering on Apple&#039;s (AAPL) campus Thursday, where CEO Steve Jobs has promised to open up the iPhone&#039;s software secrets to the world for the first time. Apple’s [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=1081&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p><font color="#000000"><b>By Jon Fortt and Michal Lev-Ram </b></font></p>
<p>Will Apple give up some control over the iPhone in order to court corporate customers?</p>
<p>That’s one of the juiciest questions surrounding a gathering on Apple&#039;s (<a href="/quote/quote.html?symb=AAPL" target="_blank">AAPL</a>) campus Thursday, where CEO Steve Jobs has promised to open up the iPhone&#039;s software secrets to the world for the first time. Apple’s invitation to the event also hinted at new business-friendly features for the device, and Silicon Valley is abuzz about what that could mean. Will the BlackBerry-toting masses be able to trade in the company smartphone for an iPhone?<span id="more-1081"></span></p>
<p>After all, Apple just isn&#039;t overtly business-like. (When was the last you saw Steve Jobs in a suit?) Sure, its products work well in office environments, but the company doesn&#039;t go out of its way to satisfy the needs of corporate buyers. While Hewlett-Packard (<a href="/quote/quote.html?symb=HPQ" target="_blank">HPQ</a>) and Dell (<a href="/quote/quote.html?symb=DELL">DELL</a>) design some of their computers to look like office equipment, Apple always aims for more of a trendy, consumer look. The implied message: Take Apple gear to the office if you like, but expect to stand out.</p>
<p>So, many onlookers are wondering how far the Apple will go to make the iPhone business-ready &#8212; and whether the company will go far enough.</p>
<p>At a bare minimum, several analysts agreed, Apple will have to offer better corporate e-mail connectivity on the iPhone. That will mean working with the likes of Microsoft (<a href="/quote/quote.html?symb=MSFT">MSFT</a>), which through its Exchange platform already has influence over the way businesses handle messaging. If Apple can link the iPhone into Microsoft&#039;s system, workers with iPhones will have just as much control over e-mail and contacts as they would from their desks.</p>
<p>&#034;I believe they&#039;re actually working with Microsoft to make e-mail sync work,&#034; said Rob Enderle, principal at Enderle Group. &#034;By connecting natively to Exchange, Apple would be able to get over the biggest hurdle that’s now keeping companies from buying iPhones.&#034;</p>
<p>Jim Swartz, chief information officer at database company Sybase, said that the e-mail and corporate directories in Exchange are not the only concern for corporate customers. At $399, the iPhone remains expensive. Plus, companies like Sybase want the freedom to put their homegrown software on a smartphone. Nonetheless, he said, &#034;Here we&#039;re seeing a lot of interest and desire for the iPhone.&#034;</p>
<p>Apple will also face pressure to let outside companies make their mark on the phone. That will mean forging partnerships with heavyweights including Oracle (<a href="/quote/quote.html?symb=ORCL" target="_blank">ORCL</a>), SAP (<a href="/quote/quote.html?symb=SAP" target="_blank">SAP</a>) and IBM (<a href="/quote/quote.html?symb=IBM" target="_blank">IBM</a>), to make sure their business software runs smoothly on the iPhone.</p>
<p>&#034;The individual companies who create software for the enterprise will have to adopt the [software developer's kit] and begin innovating,&#034; said Tim Bajarin, president of the Creative Strategies consulting firm. &#034;My personal sense from talking to these guys is that they&#039;re going to jump on the iPhone bandwagon.&#034;</p>
<p>Not everyone is convinced.</p>
<p>Michael Disabato, vice president and service director at the Burton Group, said that for big businesses to truly embrace the iPhone, Apple will have to give them the freedom to load tailored software onto it, and to remotely erase data from iPhones that are lost or stolen. That&#039;s a level of control that Research in Motion (<a href="/quote/quote.html?symb=RIMM" target="_blank">RIMM)</a> and Microsoft provide with their software, but that Apple almost never does.</p>
<p>&#034;For Apple to make this an enterprise device, they have to accept that the enterprise will want to manage this thing lock, stock and barrel,&#034; Disabato said. &#034;And they&#039;re not going to do it.&#034;</p>
<p>Or they might. Believe it or not, in the early days of the iPod, when the device worked only with the company&#039;s Mac computers, Apple executives argued about whether to make the device compatible with Windows PCs. The old Apple would have said no &#8212; that all products should feed the Mac ecosystem. But the company eventually decided to let the iPod stand alone, and work with either type of computer. Because of that decision, the iPod became a hit, not just an also-ran mp3 player.</p>
<p>Will Steve Jobs be just as pragmatic about the iPhone on Thursday? A lot of companies are eager to find out.</p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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		<title>Dell pushes a greener image</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/11/16/dell-pushes-a-greener-image/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/11/16/dell-pushes-a-greener-image/#comments</comments>
		<pubDate>Fri, 16 Nov 2007 15:00:21 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
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		<description><![CDATA[As founder and CEO Michael Dell seeks to reinvent the company&#039;s public face, he&#039;s shaking more hands and hugging more trees.






Dell CEO Michael Dell and Sun CEO Jonathan Schwartz. Image: Sun Microsystems


It was a speech at a big-business technology conference, but you could have mistaken it for an Arbor Day rally.
On stage earlier this week [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=932&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><h3>As founder and CEO Michael Dell seeks to reinvent the company&#039;s public face, he&#039;s shaking more hands and hugging more trees.</p>
</h3>
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<td><font color="#808080"><em>Dell CEO Michael Dell and Sun CEO Jonathan Schwartz. Image: Sun Microsystems</em></font></td>
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<p>It was a speech at a big-business technology conference, but you could have mistaken it for an Arbor Day rally.</p>
<p>On stage earlier this week was Dell (DELL) founder and CEO Michael Dell, giving a speech packed with talk of saving trees and preserving the planet. Sure, there were plenty of references to virtualization, a new partnership with Sun Microsystems (JAVA), and a new all-in-one desktop PC to rival Apple&#039;s (AAPL) iMac – but the biggest applause lines were eco-friendly.</p>
<p><span id="more-932"></span></p>
<p><strong><a href="http://bigtech.blogs.fortune.cnn.com/2007/10/03/microsofts-zune-the-sequel-photos-1-4/" rel="bookmark" title="Permanent Link to Microsoft’s Zune: The sequel (Photos 1-4)">Microsoft’s Zune: The sequel (Photos 1-4)</a></strong></p>
<p>And there were a lot of eco-friendly lines. Besides a restatement of the company&#039;s pledge to go carbon-neutral next year mostly through buying offsets, Dell also showed a touchy-feely video about how the &#034;Me Generation&#034; is turning into the &#034;Re-Generation.&#034; He even mentioned that its servers come in fewer cardboard boxes than Hewlett-Packard&#039;s.</p>
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<td><img src="http://fortunebrainstormtech.files.wordpress.com/2007/11/071116-dell.jpg?w=300&#038;h=350" alt="Dell stock chart" align="left" height="350" width="300" /></td>
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<td><font color="#808080"><em>Chart: Jon Fortt </em></font></td>
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<p>This wasn&#039;t about Dell going soft; instead, the tech baron&#039;s new green streak is part of the company&#039;s new image. No longer content to be known simply as a low cost leader – bargain-basement technology is out of vogue these days – he is instead positioning the company as an inspirational technology maker that&#039;s conscious of the environment while it&#039;s building cutting-edge gear.</p>
<p><strong><a href="http://bigtech.blogs.fortune.cnn.com/2007/09/07/apples-new-ipod-lineup-an-analysis-photos-15/" rel="bookmark" title="Permanent Link to Apple’s new iPod lineup: An analysis (Photos 1/5)">Apple’s new iPod lineup: An analysis (Photos 1/5)</a></strong></p>
<p>The growing global Internet economy is putting &#034;an infinite demand on servers,&#034; Dell said. And that is leading to &#034;an infinite demand on energy – and that means we have to be smarter about power consumption.&#034;</p>
<p>Dell isn&#039;t alone; the inconvenient truth of global warming has yielded some convenient technology marketing angles. When Hewlett-Packard (HPQ) last month touted the benefits of its new cooling system for data centers, the company was sure to emphasize the green angle: less heat at a data center in India that used its system meant less time running the diesel-powered air conditioning. Sustainability is big, too. When Apple unveiled its new iMac this summer, CEO Steve Jobs hailed it as the most ecologically responsible Mac yet, made of high-grade glass and aluminum that recyclers covet.</p>
<p><strong><a href="http://bigtech.blogs.fortune.cnn.com/2007/08/30/new-sony-walkman-lineup-takes-aim-at-the-ipod-photos-16/" rel="bookmark" title="Permanent Link to New Sony Walkman lineup takes aim at the iPod (Photos 1/6)">New Sony Walkman lineup takes aim at iPod (Photos 1/6)</a></strong></p>
<p>Thankfully there&#039;s more to the industry&#039;s moves than empty rhetoric. HP&#039;s Dynamic Smart Cooling technology really does cut power use in data centers, and the new recycling-friendly iMac&#039;s design clearly required forethought. Dell&#039;s computers are among the most environmentally friendly in the industry according to the Green Electronics Council, which has developed a federally-backed tool that ranks computer equipment based on its environmental impact.</p>
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		<media:content url="http://fortunebrainstormtech.files.wordpress.com/2007/11/dell-sun.jpg" medium="image">
			<media:title type="html">Jonathan Schwartz and Michael Dell</media:title>
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		<title>SupportSoft: Working with Dell, and betting its future on PC problems</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/10/12/supportsoft-working-with-dell-and-betting-its-future-on-pc-problems/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/10/12/supportsoft-working-with-dell-and-betting-its-future-on-pc-problems/#comments</comments>
		<pubDate>Fri, 12 Oct 2007 15:47:28 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
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		<description><![CDATA[Most of the trouble people have with home PCs is software-related – and it often has to do with viruses and spyware that takes over people&#039;s computers when they unwittingly download it. That&#039;s why Josh Pickus believes he can use some of a virus-writer&#039;s smartest tactics to fight back.
Pickus is CEO of SupportSoft (SPRT), a [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=815&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p><img src="http://fortunebrainstormtech.files.wordpress.com/2007/10/picture-2.png?w=78&#038;h=110" alt="Josh Pickus" align="left" height="110" hspace="10" vspace="10" width="78" />Most of the trouble people have with home PCs is software-related – and it often has to do with viruses and spyware that takes over people&#039;s computers when they unwittingly download it. That&#039;s why Josh Pickus believes he can use some of a virus-writer&#039;s smartest tactics to fight back.</p>
<p>Pickus is CEO of SupportSoft (SPRT), a Silicon Valley company with an interesting approach to fighting Windows (MSFT) PC problems. SupportSoft doesn&#039;t send a technician to your door like Best Buy&#039;s (BBY) Geek Squad, or talk you through a fix using phone-based support. Instead, when you install its diagnostic software on a PC, SupportSoft troubleshooters can temporarily take control of the computer over the Internet to fix problems while you watch.</p>
<p><span id="more-815"></span></p>
<p>Fixing computer glitches is a market that probably won&#039;t evaporate anytime soon. According to research firm Parks Associates, consumer spending on tech support will top $400 million this year, and it could approach $1 billion in 2011. That bodes well for companies like Best Buy, OfficeMax (OMX), Staples (SPLS), Circuit City Stores (CC) and CompUSA, which have gotten into that business. And Pickus is hoping SupportSoft will get some of the action, too.</p>
<blockquote>
<ul>
<li><strong><a href="http://bigtech.blogs.fortune.cnn.com/2007/09/18/a-financial-edge-from-edgy-pc-design-photos-1-7/" rel="bookmark" title="Permanent Link to A financial edge from edgy PC design (Photos 1-7)">A financial edge from edgy PC design (Photos 1-7)</a></strong></li>
</ul>
</blockquote>
<p>The company could use it. Lately SupportSoft has struggled. The company went public at the peak of the dot-com boom in early 2000, licensing its technology to high-speed Internet service providers to help reduce their customer support costs. But SupportSoft&#039;s product tended to be difficult to use, and the company didn&#039;t work hard enough to improve it and distribute it more broadly; business dried up and the stock wilted during the dot-com bust. A once-profitable business that the market valued at more than $1 billion during its heyday is now losing money and trading at less than $5 per share, for a market cap under $250 million.</p>
<p>But that&#039;s why Pickus is there. He joined last April, bringing his experience from Niku, another dot-com-bust company he helped turn around as CEO.</p>
<p>Over lunch in San Francisco, Pickus explained his plan for fixing SupportSoft.</p>
<blockquote>
<ul>
<li><strong><a href="http://bigtech.blogs.fortune.cnn.com/2007/09/11/new-design-in-hps-business-displays-photos-1-5/" rel="bookmark" title="Permanent Link to New design in HP’s business displays (Photos 1-5)">New design in HP’s business displays (Photos 1-5)</a></strong></li>
</ul>
</blockquote>
<p>First he will have to bring the company&#039;s legacy business back to profitability, a painful process that will involve cutting talented workers. But since he doesn&#039;t expect much growth from the core business of licensing the company&#039;s software to service providers, it&#039;s the only prudent thing to do. Much of the cutting should be finished by early next year.</p>
<p>Next he&#039;ll have to grow the business he believes is the key to the company&#039;s future: direct customer support. Rather than just license software to bigger service providers, Pickus believes he can get customers to install SupportSoft themselves to get their computer problems solved. Typically a customer with, say, a slow computer would be able to load the software and agree to pay less than $100 to have a technician fix the problem over the Internet. The customer pays only if the problem is solved. SupportSoft has already begun offering the service through its Support.com site, and Pickus said the company is handling &#034;thousands&#034; of fixes per quarter.</p>
<p>Pickus has a couple of clear challenges ahead, though.</p>
<p>Most important, he needs to get SupportSoft&#039;s software installed on as many computers as possible to increase the company&#039;s base of potential customers. The fastest way to do that would be to strike a deal with a PC maker to place a SupportSoft icon on a computer&#039;s desktop; while Pickus is looking for such deals, it doesn&#039;t have them yet. He said the company does have a deal with a major retailer that will result in SupportSoft&#039;s service being marketed in thousands of stores next year – but we&#039;ll have to see how that arrangement pans out. The company also has a deal with Dell (DELL) that will bring its software to some Dell PCs this holiday season, but that&#039;s a licensing deal that by itself won&#039;t dramatically help SupportSoft&#039;s bottom line. What the company really needs is more direct relationships with customers.</p>
<p>Pickus will also have to be sure that the company&#039;s technicians can competently handle a growing volume of calls, if he succeeds in steering more business toward the company. Because while it&#039;s true that there&#039;s money to be made from doing tech support well, it&#039;s also true that few things sully a company&#039;s reputation like doing it poorly.</p>
<p><font color="#ffffff">Intel (INTC) AMD (AMD) Hewlett-Packard (HPQ) Apple (AAPL)</font></p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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			<media:title type="html">Josh Pickus</media:title>
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		<title>Huawei&#039;s stake in 3Com could raise security concerns</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/09/29/huaweis-stake-in-3com-could-raise-security-concerns/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/09/29/huaweis-stake-in-3com-could-raise-security-concerns/#comments</comments>
		<pubDate>Sat, 29 Sep 2007 05:13:55 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
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		<description><![CDATA[When does a Chinese company&#039;s strategic technology investment become a national security risk?
Lawmakers were starting to ask that question Friday after 3Com, a struggling manufacturer of networking equipment, announced plans to sell itself to private equity firm Bain Capital Partners, and Chinese networking giant Huawei Technologies in a $2.2 billion cash deal.

Though Huawei&#039;s share of [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=762&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p>When does a Chinese company&#039;s strategic technology investment become a national security risk?</p>
<p>Lawmakers were starting to ask that question Friday after 3Com, a struggling manufacturer of networking equipment, announced plans to sell itself to private equity firm Bain Capital Partners, and Chinese networking giant Huawei Technologies in a $2.2 billion cash deal.</p>
<p><span id="more-762"></span></p>
<p>Though Huawei&#039;s share of 3Com appears to be modest &#8212; a source familiar with the negotiations pegs it at less than 20 percent ­ &#8212; the sale, which is expected to close in the first quarter of 2008, is still raising eyebrows among some policymakers.</p>
<p><!-- REAP --><!--startclickprintexclude--> <!--endclickprintexclude--><!-- /REAP -->&#034;If this is a pure equity investment with no integrated business plans, that&#039;s one thing. If this is more of a merged transaction where technology will be freely shared, that&#039;s another,&#034; said Michael R. Wessel, who advises lawmakers as a member of the U.S.-China Economic and Security Review Commission.</p>
<p>Critics worry that 3Com&#039;s networking technology could allow China to more readily eavesdrop on U.S. domestic conversations; they also worry that 3Com&#039;s encryption technology will make Chinese networks harder to tap.</p>
<p>Wessel says the arrangement might turn out to be perfectly fine, but &#034;as a participant in the policy-making process, I&#039;m certainly going to raise questions about this transaction.&#034;</p>
<p>It&#039;s not the first time a Chinese technology company&#039;s purchasing ambitions have ruffled feathers. Before IBM sold its PC business to Beijing-based Lenovo in 2005, policymakers voiced concerns that IBM&#039;s encryption technology could aid the Chinese military.</p>
<p>And according to a <em>New York Times</em> story in August, officials were alarmed by similar encryption concerns after rumors surfaced that a Chinese technology company was considering buying an unnamed U.S.-based hard drive maker.</p>
<p>Get used to it. Because of the Chinese economy&#039;s rapid growth, companies there find themselves flush with cash to invest in overseas businesses &#8212; and high tech is an attractive place to put it.</p>
<p>&#034;China is now at a point where it&#039;s got a lot of capital it wants to export. We&#039;re going to see this come up more and more,&#034; said Kenneth Lieberthal, who served as senior director for Asia at the National Security Council during the close of the Clinton administration.</p>
<p><!-- REAP --><!--startclickprintexclude--> <!--endclickprintexclude--><!-- /REAP -->3Com&#039;s longstanding woes, with its stock recently languishing at under $4, rendered it a likely acquisition target. Though the company was once a networking giant that rivaled industry leader Cisco Systems, a series of missteps over the last decade led the company into crippling losses.</p>
<p>At times the company made poorly timed purchases, like when it bought modem maker U.S. Robotics in 1997, just as the networking market was shifting away from Robotics&#039;s products. Then there were bad cuts; during the tech downturn 3Com stopped selling equipment that was popular with large businesses, just that market rebounded.</p>
<p>Lieberthal cautioned that fair trade ought to be protected in the absence of a smoking gun. If 3Com&#039;s technology is something that Huawei could purchase elsewhere, there&#039;s little reason to prevent a U.S. company from selling it.</p>
<p>&#034;One of the things you really don&#039;t want to do is interfere with financial markets, unless you&#039;re dealing with a rogue regime,&#034; he said. &#034;If you&#039;re not dealing with that category, you really have to have a good reason for stopping transactions from taking place.&#034;</p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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		<title>Live: Adobe Systems Q3 earnings call</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/09/17/live-adobe-systems-q3-earnings-call/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/09/17/live-adobe-systems-q3-earnings-call/#comments</comments>
		<pubDate>Mon, 17 Sep 2007 17:59:08 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
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		<description><![CDATA[Adobe Systems (ADBE) has reported Q3 earnings that blew past analyst expectations and the company&#039;s own projections, based on unexpectedly strong sales of its Creative Suite and Acrobat products. Because Adobe is the first major technology company to report earnings during this cycle, executives sometimes offer insights into the technology buying patterns that affect larger [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=726&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p>Adobe Systems (ADBE) has reported Q3 earnings that blew past analyst expectations and the company&#039;s own projections, based on unexpectedly strong sales of its Creative Suite and Acrobat products. Because Adobe is the first major technology company to report earnings during this cycle, executives sometimes offer insights into the technology buying patterns that affect larger players such as Apple (AAPL) and Intel (INTC).</p>
<p><span id="more-726"></span></p>
<p>The call has begun.</p>
<p>Bruce Chizen, CEO; and Shantanu Narayen, COO, are among those on the call.</p>
<p>Bruce says the growth in Q3 was outstanding. Revenue was $851.7 million, up 41 percent from a year ago. CS3 adoption and Acrobat momentum are the main reason, but Chizen cites growth across all businesses.</p>
<p>Mark, the CFO, is giving all the GAAP and non-GAAP numbers; I&#039;ll catch up with those in a bit.</p>
<p>The effective tax rate: 25.9 percent</p>
<p>GAAP net income: $205.2 million, up from $94.4 million a year ago, and $152.5 million last quarter.</p>
<p>GAAP diluted earnings per share: 34 cents, comp to 16 cents a year ago, and 25 cents last quarter.</p>
<p>Non-GAAP: 45 cents, up from 29 cents from a year ago, and 37 cents last quarter.</p>
<p>Revenue by segment:</p>
<p>Creative: $504.5 million, up from $331.6 a year ago, $436.6 million last quarter, up 65 percent y/y</p>
<p>Knowledge worker:</p>
<p>$176.8 million, compared to $156 million a year ago, $184.8 million last quarter.</p>
<p>Enterprise:</p>
<p>$59.3 million, compared to $49.4 million a year ago, $52.3 million last quarter, up 20 percent y-y</p>
<p>Mobile:</p>
<p>$13 million compared to $9.1 million a year ago, and $12.3 last quarter, up 43 percent y-y</p>
<p>Other:</p>
<p>was down 7 percent (this is PostScript, and has been declining for a long time)</p>
<p>Record revenue in all markets. Percentage breakdown:</p>
<p>Americas: 47 percent</p>
<p>Europe: 33 percent</p>
<p>Asia: 20 percent</p>
<p>Adobe closed the quarter with 6,677 employees, up from 6,427 last quarter.</p>
<p>Global channel inventory was within company policy.</p>
<p>The quarter saw $425.2 million cash flow.</p>
<p>17.6 million shares were repurchased.</p>
<p>Adobe had $2 billion in cash at the end of the quarter, down from $2.3 billion (due to repurchases et al).</p>
<p>Q4 targets. Adobe expects:</p>
<p>$860 &#8211; $890 million revenue target</p>
<p>GAAP operating margins 30-31 pct</p>
<p>non-GAAP of 41 percent</p>
<p>effective tax rate 25-26 percent</p>
<p>non-GAAP 26-27 percent</p>
<p>GAAP earnings: 35-37 cents per share</p>
<p>46-48 cents non-GAAP</p>
<p>Shantanu:</p>
<p>36 percent increase in CS revenue. Adobe expects a long tail.</p>
<p>Most popular versions: Design Premium , Design Standard, Master Collection, then others</p>
<p>Strong demand for Mac versions</p>
<p>27 percent of revenue came from Photoshop Extended</p>
<p>There was high demand for Mac video software &#8212; about 37 percent of the mix was Mac.</p>
<p>Knowledge worker up 17 percent. Acrobat Professional continues to be more popular than standard.</p>
<p>The Department of Defense plans to begin using Acrobat Connect.</p>
<p>Server:</p>
<p>The segment that includes LiveCycle was up 20 percent.</p>
<p>Mobile:</p>
<p>Flash Lite adoption is strong.</p>
<p>AIR development is going well.</p>
<p>Bruce:</p>
<p>&#034;Clearly Q3 was a great quarter for us.&#034; He says the company is poised to break the $3 billion revenue mark, and they&#039;re positioned to achieve double-digit growth well into the future.</p>
<p>Bruce is asked what&#039;s driving Adobe revenues now. He says overall marketing spend is now one of the biggest drivers of Adobe revenues. Overall IT spend is a factor for Acrobat. High-end consumer spend is something else Adobe looks at – luxury spend at retailers like Tiffany.</p>
<p>Shantanu says it&#039;s very early in CS3 sales still.</p>
<p>Chizen: The suites are still the majority of the revenue, but the individual products are still going OK too, which tells them they might be able to convert some more customers to suites later.</p>
<p>On Master Collection:</p>
<p>Shantanu says Master Collection was built so that creative professionals could have everything in one place that works well together. Individual creative professionals are the main customers. Larger customers don&#039;t tend to be the ones getting it, though they might come along later.</p>
<p>Chizen: Overall, there was particular strength in Europe, which was surprising. Q3 is typically tough for Adobe, and that weakness is typically in Europe. Bruce said people rushed back from holiday to buy Creative Suite.</p>
<p>Bruce says the majority of Adobe revenue today is not shrink-wrapped, and cautions analysts against drawing too many conclusions based on non-licensing revenue data.</p>
<p>On Mac strength: Shantanu says CS3 performance gains on the Mac are impressive, and the Mac is a vibrant platform. Adobe came back to the Mac with video products, and Adobe is off to a strong start with those.</p>
<p>On geographic performance, Bruce says Europe really outperformed expectations, and that made the Americas look a little stronger than usual, but Adobe is happy with the overall mix.</p>
<p>Shantanu says he expects a long tail on the CS3 cycle because there was a long cycle between CS2 and CS3, and the reviews have been outstanding for CS3. Adobe knows that enterprises take longer to buy, and Adobe is doing customer research on big customers who have not yet moved. Considering this information the company is gathering, and the fact that CS2 had a long tail, it seems CS3 will have one, too.</p>
<p>Bruce weighs in on the long tail: The overachievement in Q3, which was greater than the Street and Adobe anticipated, serves as validation that any business that needs to communicate is a potential customer for CS3. People need reliable, engaging information that works cross-platform. (In other words, there are a lot more potential CS3 customers out there than some people thought, and demand is higher among those potential customers.)</p>
<p>Shantanu on the mobile business: Royalties on Flash Lite make up the bulk of revenue. People are also using tools to create the content. Adobe is also looking at carrier services. In 2008, Adobe expects licensing to continue to be the bulk of mobile revenue.</p>
<p>Shantanu says Adobe believes video is a more compelling way of communicating in general. Adobe continues to be paranoid about what Microsoft does, but the video playing capabilities Adobe has in Flash continue to be the way people want to communicate in video. Adobe isn&#039;t resting on its laurels, and the company continues to innovate with HD and with the Flash video player.</p>
<p>Bruce says more than 98.5 percent of people with computers have Flash player, and more than 90 percent of people with computers upgrade their player within a year of a new release. Even Microsoft&#039;s own MSN site has a lot of Flash on it, demonstrating that Silverlight (Microsoft&#039;s new competitor to Flash) is not yet there.</p>
<p>Back to CS3, Europe was a big surprise, Bruce says. (I  wonder how much of this has to do with the Web design boom in Europe.) The percentage of suites over standalone products was strong.</p>
<p>Shantanu says Adobe did a better job of priming the market this time with public betas and whatnot, and that probably helped create the revenue surprise.</p>
<p>Bruce says that a majority of corporate customers still haven&#039;t upgraded, which is a good sign for future revenue from CS3.</p>
<p>Mark says Adobe expects CS3 to continue to be above CS2 in revenue levels throughout its cycle.</p>
<p>Adobe will probably end the year with 39 percent operating margins, and won&#039;t try too hard to increase those margins because Adobe wants to invest in R&amp;D. Bruce says Adobe wants to grow earnings through revenue growth, not cost-cutting.</p>
<p>Bruce says Asia is heavily driven by Japan because the rest of Europe is heavily affected by piracy. Japan is strongest in Q1 and Q2.</p>
<p>Analyst Gene Munster says the analyst notes tomorrow will say Adobe&#039;s quarter was a home run, but was this it? (Key question. The Street has been underestimating Adobe lately.)</p>
<p>Bruce repeats that this revenue surprise was a validation of the market dynamics, and that enterprises still haven&#039;t weighed in, so their CS3 revenues are still to come.</p>
<p>Shantanu says that Adobe has to do a significant amount of work with handset makers and carriers to make sure that Flash Lite works.</p>
<p>Bruce says that he expects Flash will eventually be on all mobile phones and carriers.</p>
<p>Bruce says the iPhone was a blessing for Adobe &#8212; a great device. The manufacturers who are looking to follow the iPhone are reading the reviews that say a deficiency of the iPhone is that it doesn&#039;t have Flash &#8212; Chizen says that leads Adobe to believe that Flash will be on a lot of high-end handsets in the near future.</p>
<p>In response to a question about Acrobat growth: Bruce says Adobe is very pleased with 17 percent y-y growth in the Knowledge Worker segment. Adobe believes there are 97 million workers who could take advantage of the software. Bruce says you don&#039;t need to compare Creative Suite growth rates to Acrobat. Adobe&#039;s pleased with both.</p>
<p>The call has ended.</p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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		<title>Should it be a crime to unlock an iPhone?</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/08/27/should-it-be-a-crime-to-unlock-an-iphone/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/08/27/should-it-be-a-crime-to-unlock-an-iphone/#comments</comments>
		<pubDate>Mon, 27 Aug 2007 15:27:01 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
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		<description><![CDATA[Lawyers disagree about when, if ever, it’s a crime to unlock an iPhone. Most agree that unlocking your own iPhone doesn’t pose a problem – but things get murky if you post instructions online for unlocking an iPhone, or if you sell software for unlocking iPhones.

That’s the conclusion Grant Gross comes to in his InfoWorld [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=372&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p><img src="http://fortunebrainstormtech.files.wordpress.com/2007/09/apple-iphone.jpg?w=100&#038;h=120" align="left" height="120" hspace="10" vspace="10" width="100" />Lawyers disagree about when, if ever, it’s a crime to unlock an iPhone. Most agree that unlocking your own iPhone doesn’t pose a problem – but things get murky if you post instructions online for unlocking an iPhone, or if you sell software for unlocking iPhones.</p>
<p><span id="more-372"></span></p>
<p>That’s the conclusion <a href="http://news.yahoo.com/s/infoworld/20070827/tc_infoworld/91375" target="_blank"><strong>Grant Gross comes to in his InfoWorld story</strong></a> about the subject. Unlocked iPhones are the talk of the tech and telecom worlds after three groups claimed last week to have separated the Apple (AAPL) phone from its AT&amp;T (T) network using different methods.</p>
<p>People who argue that unlocking the iPhone could be illegal point to the Digital Millennium Copyright Act’s anti-circumvention provisions, the same rules that make it illegal to crack the encryption on Hollywood DVDs and other media. But the DMCA provision has an exception for people who unlock their phones “for the sole purpose of lawfully connecting to a wireless telephone communication network.” <a href="http://www.copyright.gov/1201/" target="_blank"><strong>[See here.]</strong></a></p>
<p>So I have a problem with the argument that unlocking an iPhone should ever be illegal. If it’s legal under the DMCA for people to unlock their own phones, why should it be wrong for people to help others do the same thing?</p>
<p>The truth is, unlocking phones is different from unlocking Hollywood DVDs. In the case of DVDs, the studios can argue that when people break their locks, the result is that people steal their intellectual property. But in the case of a phone, it’s not so simple. If I buy a phone and I want to lawfully use it on the network of my choosing, who’s getting ripped off? I still bought the phone, and I’m still paying a carrier for service. I’m just doing it on my terms.</p>
<p>I could see AT&amp;T arguing this as a security issue – the company could say that unlocked phones on their networks could be running software that they have not tested for compatibility. But there are holes in that argument. Unlocked phones are common on GSM networks, and AT&amp;T might have to prove why the iPhone is any different. I also have a hunch that T-Mobile, the other major GSM carrier in the United States, might say it has no problem at all with unlocked iPhones on its network.</p>
<p>Still, it’s possible that wireless carriers would find a way to fight widespread phone unlocking. In the United States, Verizon Wireless (VZ), AT&amp;T, Sprint (S) and T-Mobile (DT) have taken great pains to keep customers tethered to their service plans by subsidizing phones.</p>
<p>Mostly, that business model has worked quite well. More than half of the cell phones that U.S. consumers bought this spring cost them less than $50 after carrier subsidies, according to NPD Group.</p>
<p>Thanks to Apple, though, a new day is dawning. The iPhone is proving that some number of consumers – probably in the millions – is willing to pay a premium for an unsubsidized phone with the right design and feature set.</p>
<p>Now that the iPhone is among us, it’s going to be tough for carriers to argue that it should be a crime to unlock it and use it on another network. Sure, unlocking a phone might void the warranty in some cases, and then switching carriers might result in an early termination fee.</p>
<p>But should it be a crime? I don’t think so.</p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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		<title>Google uses YouTube for search privacy PR effort</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/08/09/google-uses-youtube-for-search-privacy-pr-effort/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/08/09/google-uses-youtube-for-search-privacy-pr-effort/#comments</comments>
		<pubDate>Thu, 09 Aug 2007 07:27:13 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Microsoft]]></category>
		<category><![CDATA[News]]></category>
		<category><![CDATA[Online]]></category>
		<category><![CDATA[Security]]></category>
		<category><![CDATA[Yahoo]]></category>

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		<description><![CDATA[Google (GOOG) has begun using its YouTube video site to get its message out about privacy policies for its search engine.

A message on the Official Google Blog describes the effort this way:
This video runs about 5 minutes, so we couldn’t cover everything. Over time, we hope to create additional videos where we talk about other [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=274&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p>Google (GOOG) has begun using its YouTube video site to get its message out about privacy policies for its search engine.</p>
<p><span id="more-274"></span></p>
<p>A message on the Official Google Blog describes the effort this way:</p>
<blockquote><p><em>This video runs about 5 minutes, so we couldn’t cover everything. Over time, we hope to create additional videos where we talk about other privacy issues: what data do we collect when you register for a Google Account? or &#8211; when you search on Google while you’re logged in? or &#8211; why does Google keeps server logs? But before we head down the road of sequels, we’d like to get your feedback on whether you find this video format helpful.</em></p></blockquote>
<p>The video does explain Google&#039;s basic privacy policies in a way that&#039;s easy for non-techies to understand, but I couldn&#039;t help feeling that the video wasn&#039;t telling the whole story. As the Google blog entry concedes, the video doesn&#039;t mention (for example) that the company connects more information to your identity when you search while logged into your Google Account – that&#039;s the sort of information I think most people find troubling.</p>
<p>Still, the video is more forthcoming and informative than many companies have been with their privacy policies. The search privacy issue is getting attention again lately. The Center for Democracy in Technology released a report this week praising the major search engines, including those from Google, Yahoo (YHOO) and Microsoft (MSFT), for promising to alter their privacy policies and add more safeguards.</p>
<p>To judge for yourself how thorough and informative Google&#039;s video is, view it below.</p>
<p><span style="text-align:center; display: block;"><a href="http://brainstormtech.blogs.fortune.cnn.com/2007/08/09/google-uses-youtube-for-search-privacy-pr-effort/"><img src="http://img.youtube.com/vi/kLgJYBRzUXY/2.jpg" alt="" /></a></span></p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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		<title>Research: Fingerprint security in pro PCs now mainstream; cell phones next</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/07/25/research-fingerprint-security-in-pro-pcs-now-mainstream-cell-phones-next/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/07/25/research-fingerprint-security-in-pro-pcs-now-mainstream-cell-phones-next/#comments</comments>
		<pubDate>Wed, 25 Jul 2007 07:31:16 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
		<category><![CDATA[Dell]]></category>
		<category><![CDATA[HP]]></category>
		<category><![CDATA[Microsoft]]></category>
		<category><![CDATA[Mobile Computing]]></category>
		<category><![CDATA[Motorola]]></category>
		<category><![CDATA[News]]></category>
		<category><![CDATA[PCs]]></category>
		<category><![CDATA[Phones]]></category>
		<category><![CDATA[Security]]></category>

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		<description><![CDATA[Most every major PC manufacturer is integrating fingerprint security into its systems now according to a research report, and that&#039;s creating a boom market in fingerprint sensors; according to Frost &#38; Sullivan, the sensors market was worth 113.6 million in 2006, and it should reach $1.9 billion in 2013. (Note to readers: always take multi-year [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=212&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p><img src="http://fortunebrainstormtech.files.wordpress.com/2007/09/microsoft-fingerprint.jpg?w=100&#038;h=152" align="left" height="152" width="100" />Most every major PC manufacturer is integrating fingerprint security into its systems now according to a research report, and that&#039;s creating a boom market in fingerprint sensors; according to Frost &amp; Sullivan, the sensors market was worth 113.6 million in 2006, and it should reach $1.9 billion in 2013. (Note to readers: always take multi-year projections with a grain of salt.)</p>
<p><span id="more-212"></span></p>
<p>Enterprise-class laptops from Hewlett-Packard (HPQ), Dell (DELL) and other major computer makers increasingly include fingerprint swipe capabilities built next to the keyboard. Fingerprint readers are increasingly available in peripherals, too. The Microsoft (MSFT) mouse above integrates a fingerprint reader, as do offerings from Logitech (LOGI).</p>
<p>What&#039;s next? Possibly business from the likes of Nokia (NOK) and Motorola (MOT).<a href="http://www.frost.com/prod/servlet/press-release.pag?Src=RSS&amp;docid=102604633" target="_blank"> According to Frost &amp; Sullivan:</a></p>
<blockquote><p><em>“This exceptional growth in the silicon fingerprint market is primarily due to the growing popularity of biometric-enabled laptops and PC peripherals,” says <em>Frost and Sullivan</em> Research Analyst Imran F Khan. “Also, increasing security concerns drive manufacturers from vertical markets toward a relatively safe and convenient security solution such as silicon fingerprint sensors.”</em></p>
<p><em>Cell phone manufacturers in particular have recently expressed interest in silicon chip fingerprint sensors due to their small size and low power consumption, which make it an ideal security solution for portable and battery-operated devices. The growing popularity of silicon fingerprint-enabled laptops and cell phones will also likely fuel adoption of silicon sensors in door access, automobiles, and ATMs.</em></p></blockquote>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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		<title>Google&#039;s new policy for tracking users: not much different from the old one</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/07/16/googles-new-policy-for-tracking-users-not-much-different-from-the-old-one/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/07/16/googles-new-policy-for-tracking-users-not-much-different-from-the-old-one/#comments</comments>
		<pubDate>Mon, 16 Jul 2007 11:09:26 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
		<category><![CDATA[Google]]></category>
		<category><![CDATA[Microsoft]]></category>
		<category><![CDATA[Online]]></category>
		<category><![CDATA[Security]]></category>
		<category><![CDATA[Yahoo]]></category>

		<guid isPermaLink="false">http://bigtech.wordpress.com/2007/07/16/googles-new-policy-for-tracking-users-not-much-different-from-the-old-one/</guid>
		<description><![CDATA[Today Peter Fleischer, Google&#039;s (GOOG) Global Privacy Counsel, said Google will make its people-tracking Internet cookies expire after two years instead of lasting for decades. (Cookies are little files that Web sites routinely place on your computer to record your online activity – Google cookies typically had been set to expire in the year 2038.)
There&#039;s [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=183&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p>Today Peter Fleischer, Google&#039;s (GOOG) Global Privacy Counsel, said Google will make its people-tracking Internet cookies expire after two years instead of lasting for decades. (Cookies are little files that Web sites routinely place on your computer to record your online activity – Google cookies typically had been set to expire in the year 2038.)</p>
<p>There&#039;s one major catch to Google&#039;s new policy, though: From all appearances, the cookies expire only if you stop using Google completely for two years.</p>
<p><span id="more-183"></span></p>
<p>From <a href="http://googleblog.blogspot.com/2007/07/cookies-expiring-sooner-to-improve.html" target="_blank">the blog post</a>:</p>
<blockquote><p><em>In the coming months, Google will start issuing our users cookies that will be set to auto-expire after 2 years, while auto-renewing the cookies of active users during this time period. In other words, users who do not return to Google will have their cookies auto-expire after 2 years. Regular Google users will have their cookies auto-renew, so that their preferences are not lost. And, as always, all users will still be able to control their cookies at any time via their browsers.</em></p></blockquote>
<p>I&#039;m asking Google for clarity on exactly what this means. If the two-year clock literally resets every time you visit Google, I don&#039;t see how this cookie policy is much different from the previous one. It certainly doesn&#039;t do a better job at helping the online masses understand and control just how closely Google watches them.</p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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		<title>Akamai pulls the covers off Web traffic</title>
		<link>http://brainstormtech.blogs.fortune.cnn.com/2007/06/07/akamai-pulls-the-covers-off-web-traffic/</link>
		<comments>http://brainstormtech.blogs.fortune.cnn.com/2007/06/07/akamai-pulls-the-covers-off-web-traffic/#comments</comments>
		<pubDate>Thu, 07 Jun 2007 11:50:08 +0000</pubDate>
		<dc:creator>Jon Fortt, senior writer</dc:creator>
				<category><![CDATA[Big Tech]]></category>
		<category><![CDATA[News]]></category>
		<category><![CDATA[Online]]></category>
		<category><![CDATA[Security]]></category>

		<guid isPermaLink="false">http://bigtech.wordpress.com/2007/06/07/akamai-pulls-the-covers-off-web-traffic/</guid>
		<description><![CDATA[Interesting news out of Akamai (AKAM) today: The company is showing off some interactive maps that give information about the health of the Internet and what people are doing online. For example, its maps show there is a flurry of network attacks right now in Venezuela; 844 in the last 24 hours.
Other interesting tidbits: News [...]<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=brainstormtech.blogs.fortune.cnn.com&blog=8466345&post=159&subd=fortunebrainstormtech&ref=&feed=1" />]]></description>
			<content:encoded><![CDATA[<div class='snap_preview'><br /><p><img src="http://fortunebrainstormtech.files.wordpress.com/2007/09/akamai-overview.jpg?w=200&#038;h=145" align="left" height="145" hspace="10" vspace="10" width="200" />Interesting news out of Akamai (AKAM) today: The company is showing off some <a href="http://www.akamai.com/html/technology/visualizing_akamai.html">interactive maps that give information</a> about the health of the Internet and what people are doing online. For example, its maps show there is a flurry of network attacks right now in Venezuela; 844 in the last 24 hours.</p>
<p>Other interesting tidbits: News is very popular in North America, where it&#039;s being viewed at a rate of nearly 2.3 million news-related Web site visits per minute today.</p>
<p><span id="more-159"></span></p>
<p><img src="http://fortunebrainstormtech.files.wordpress.com/2007/09/akamai-chart.jpg?w=400&#038;h=179" align="left" height="179" width="400" /> Next is Europe with 245,000 views per minute. In North America, news views peaked just after 4 p.m. EST yesterday. News reading drops off between 11:30 p.m. and 9 a.m. EST on your typical day.</p>
<p>If Akamai can do this, just imagine the sort of data Google (GOOG) has about the world&#039;s Web-surfing habits.</p>
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			<media:title type="html">Jon Fortt, senior writer</media:title>
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