"The purpose of a phone is a phone. Phones don't work that well." -- Russell Simmons, Def Jam founder and Motorola consultant, telling wireless execs to perfect voice-call quality before adding features For those worried about losing jobs to India, there's more bad news: The cost of transmitting work offshore is expected to plummet by as much as 60% next year. Thanks to an Indian investment boom in undersea cables, the country's capacity to exchange data with the rest of the world has exploded in the past three years, says researcher TeleGeography.
This will boost India's cost advantage. A high-speed corporate connection robust enough to run a call center in India, for example, now costs as much as $100,000 a month. But as two new undersea cables come online by yearend, the monthly savings from price cuts for data hookups could reach $60,000. "That's an important cost of doing business," says Kenny Rosenblatt, CEO of U.S. gamemaker Arkadium, who has run software- development teams in India and Ukraine.
India's bandwidth frenzy took off in 2001, just as the overheated networking market was collapsing in the U.S. and Europe. This allowed companies such as Tata Indicom to add bandwidth at fire-sale prices and boost the country's capacity seventeenfold. With costs falling, can cut-rate videoconferencing with Indian colleagues be far behind? Is Safeway (SWY) CEO Steven Burd about to get the Michael Eisner treatment? On Mar. 25, five of the nation's biggest public pension funds were expected to launch a vote-no campaign aimed at tossing out Burd. It turns out that plenty more big investors are ticked off at Burd and two other Safeway directors, William Tauscher and Robert MacDonnell.
Pension-fund officials from Connecticut and four other funds say they will withhold their votes at the May 20 annual meeting. Shareholder activists say five more public funds will join. And behind the scenes, support is coming from the AFL-CIO, which recently ended a bitter labor battle with Safeway.
Fund officials say the grocery chain has performed poorly under Burd. And they want MacDonnell and Tauscher out because of conflicts of interest. Safeway defends Burd and says their outside directors are independent.
Proxy experts think a no vote might hit 35%, which would allow investors to run dissident candidates next year. The shareholder revolt that battered the Walt Disney (DIS) CEO is helping to galvanize funds. Says Carol Bowie, with the Investor Re-sponsibility Research Center: "No CEO is immune." After nearly four years of investing more than $20 million through his nonprofit foundation, eBay (EBAY) founder and Chairman Pierre Omidyar is switching gears.
On Mar. 23, he revealed that his Omidyar Foundation is transforming itself into the Omidyar Network, a new organization that will invest not only in nonprofit groups but also in for-profit companies that could provide social benefits. It's an unusual move for a nonprofit foundation -- and an expensive one. Omidyar Network will have to give up millions of dollars in tax exemptions.
What gives? Speaking at PC Forum, a tech industry confab in Scottsdale, Ariz., the 36-year-old creator of the world's largest online marketplace says he has become dissatisfied with the limitations of investing in nonprofits. Too many of them are less effective than they could be because they duplicate efforts and often fail to measure results.
At the same time, he says, "you can have a significant social impact with a for-profit enterprise" -- such as eBay and Meetup.com, the online meeting service that helped launch Howard Dean. Omidyar still plans to support nonprofits -- especially those, like eBay, that are a "catalyst for connectivity." Even before an administrator at the University of California at Los Angeles was arrested on suspicion of selling body parts, medical schools wondered whether students needed to learn anatomy by dissecting cadavers. Bodies, after all, can be hard to come by. Now there's another way for future doctors to learn the difference between a triceps and a trachea. Touch of Life Technologies in Aurora, Colo., sells software that lets students click their way through a virtual cadaver. VH Dissector was created by taking 2,000 photos as a real cadaver was sliced up. Harvard and Tulane recently placed orders. Say good-bye to cadaver shortages. The war on computer viruses is beginning to feel a lot like the war on drugs. We spend and spend, but the fighting never ends. Companies and government agencies have upped their investments in antivirus software, and now at least 90% of their machines are protected.
Yet a survey of 300 tech managers found that the average recovery costs from an attack have jumped 23% from 2002, to $100,000, say security consultants at ICSA Labs. Why the rise? The bad guys are getting smarter, too, exploiting bugs and infecting PCs faster. Mark Walsh's career has taken him from highfliers such as HBO to AOL to dot-com dud Verticalnet. But he has never been as passionate about work as he is now, as CEO of Progress Media. Its liberal radio network, Air America Radio, will be launched on Mar. 31. Walsh and fellow investors who share his political bent have put $30 million into the New York startup. He says the time is right for talk-radio hosts to lean left. "America is divided as at no other time in the past 100 years." On-air personalities will include comedian Al Franken, rapper Chuck D, and Robert Kennedy Jr. Progress leases stations in New York, Chicago, Los Angeles, and San Francisco that reach about 20% of the U.S. Later, it plans to buy stations outright.
Walsh, 49, has advised the Democratic National Committee and Senator Kerry on Internet issues. So how will Air America fill its air time if Kerry gets to the White House? "There will be plenty of pomposity and idiocy to skewer," says Walsh. In an attempt to curb money laundering, the USA Patriot Act decreed that banks must verify customers' identities with periodic searches. For banks, this means checking customer rolls against lists of bad guys. But Citibank is quietly testing what could be a more efficient process.
It's delivered through IBM's powerful Internet search tool, WebFountain, and London software company Semagix. The IBM data miner trawls the "deep Web" -- content in databases that is hidden from normal search engines. For example, Googling "Library of Congress" and "Jack London" will return pages with both phrases. But WebFountain will drill down another layer, turning up the Library's entire catalog of London novels -- which Google doesn't do. Semagix' software then derives pat-terns from the search that a human may not see. If a customer is within even six degrees of separation from a red-flagged person or group, the bank knows instantly. Citi is mum about the software, but IBM and Semagix confirm the test.
The technology won't catch money-launderers savvy enough to use a name that has never appeared on a Web site. But having the technology could direct would-be criminals to use banks with less powerful screens. That alone could make the service valuable. With $400 billion in assets last year, U.S. foundations are neglecting a powerful tool for social change: the clout of their proxy votes. "Foundations can further their missions by being wise about the 95% of their assets they don't give away," says Neva Rockefeller Goodwin, a philanthropist and economist who is helping to launch a get-out-the-proxy-vote campaign.
Big funds such as the Ford Foundation have guidelines for proxy voting. Now their smaller brethren are getting into the act. With 31,600 shares of Smithfield Foods, the $414 million Nathan Cummings Foundation pitched a resolution last year calling on the pork producer to report on its farms' environmental impact. The SEC disqualified the resolution, but Smithfield decided to release some of its data anyway.
Lesson for the 62% of foundations that leave their voting to outside money managers: Put your mission where your money is.
For more on the matter, see "A Bigger Voice for Small Nonprofits"