"Presidential memoirs, they say, are dull and self-serving. I hope mine is interesting and self-serving." -- Bill Clinton, on his forthcoming book
A dormant, three-year-old European Union investigation into potential anticompetitive practices at chipmaker Intel (INTC) is suddenly heating up again. BusinessWeek has learned that, over the past two weeks, regulators sent letters of inquiry to three dozen PC and server makers, including Dell (DELL), Hewlett-Packard (HPQ), and IBM (IBM).
Regulators are trying to confirm allegations made by rival Advanced Micro Devices (AMD) (AMD) that Intel threatened PC makers with retaliation if they supported the April, 2003, launch of its new 64-bit Opteron server chip and the follow-on introduction of its 64-bit Athlon 64 desktop processor. Both launches featured relatively small players, although IBM, Sun (SUNW), and HP have since agreed to use AMD's new chips.
EU officials note that the inquiry doesn't necessarily signal it's launching a case against Intel. "This is a new fact-finding phase," says a spokeswoman.
Intel, which says it's cooperating with the investigation, hasn't received any recent inquiries from regulators. "We believe that our business practices are both fair and lawful," says spokesman Chuck Mulloy.
AMD declined to identify the basis of its complaints. Privately, company officials say that they have new information supporting their claims and have passed it to regulators.
AMD has alleged that the "Intel Inside" branding campaign makes it more difficult to compete. The chip giant gives hundreds of millions of marketing dollars annually to PC makers such as Dell, Sony (SNE), HP, and Gateway (GTW). The money, which is determined by the number of notebook and desktop PCs they sell with the Intel Inside logo, supports their ad campaigns. (HP sells machines with AMD processors as well.) Intel chips power more than 83% of the world's PCs.
The investigation could go on for months, and while nothing may come of it, the bitter rivalry between AMD and Intel is sure to last much longer than that.
Western companies are rushing to hire Indian outsourcers, but now it's the Indians' turn. In the past two years, a dozen U.S. call centers and tech-services companies have been snapped up by Indian outsourcers looking to boost their industry expertise and customer bases. In March, Indecomm Global Services, a health-care outsourcer in Bangalore, paid $5 million for San Francisco's Simpata Group, which manages human-resources software for Blue Cross/Blue Shield insurers.
U.S. call centers are cheap. They can't match the costs of the Indians, so they can be had for less than half of sales, compared with 1.5 to 2.5 times for Indian outfits. Bombay's Essar Group and Deutsche Bank invested $28 million and received warrants to buy 80% of Texas call-center operator Aegis Communications Group, which last year generated sales of $140 million.
Will the Indians simply shift operations overseas? Aegis' new owners say they won't cut U.S. jobs, but they plan to relocate back-office functions such as human resources and accounting to India. And Bombay's Godrej Group has added 100 U.S. workers to Upstream, a call center it bought in November. If all India's buyouts work out so well, it might calm the uproar over those jobs moving to Bangalore.
Skyrocketing gasoline prices are pushing some consumers to dump their big gas-guzzling sport-utility vehicles. Auto retail Web site Cars.com says it noticed a 10% increase in the number of used SUVs for sale in May. In fact, SUV owners have been selling their vehicles on the site at an increasing rate since January, says Chris Long of Cars.com. Another car-selling Web site, Autobytel.com, says that since January it has seen a 20% drop in consumers looking to buy large SUVs.
One of the most heated debates raging in Detroit these days is whether rising gas prices are scaring consumers away from big SUVs. Even though prices at the pump have soared on average 12 cents per gallon over the past month, to $2.03, carmakers insist sales are healthy. General Motors points out that sales of its largest SUVs, like the Chevy Suburban, were up 8.5% in May.
Still, there are other signs that gas prices are a concern: Incentives on new SUVs are rising. Edmunds.com, which tracks incentives, says the average discount on large SUVs in April was 19%, compared with 13% for more-efficient compact SUVs. There is some good news for carmakers: Luxury SUVs were discounted only 6.5% in April. That's the idea behind a new food outlet, Cereality, where for about $3, customers can get a 32-oz. bowl of any combination of cereals with toppings and milk. Cereal makers are stoked, as they've tried for years to market beyond the breakfast table and are currently battling the low-carb buzzsaw. Quaker has invested an undisclosed amount in Cereality, and General Mills (GIS) and Kellogg (K) have offered business advice. The pilot store -- at Arizona State University in Tempe -- has yielded some surprises, such as a strong yearning among collegians for Cinnamon Toast Crunch. Also, old-fashioned Life is the top seller. Maybe Mikey can do the commercials? Homeowners insurance in 2004 will see its smallest jump in five years,just 2.8%, to an average $608, projects the Insurance Information Institute. That's down from last year's 7.4% increase.
One big factor: A May study found that ``toxic'' mold, which led to total payouts of $3 billion in 2002, is less of a health risk than had been thought. And 46 states have ruled insurers are not liable for mold claims. Also, fears that inspired homeowners to buy terrorism riders have subsided. Insurers and homeowners can breathe a sigh of relief. Larry Bossidy is that rare thing: a former top exec who has made a seamless transition into a new profession. On June 4, the ex-CEO of Honeywell (HON) and Allied-Signal schmoozed with book-sellers at BookExpo, the industry's huge trade show, promoting the October debut of Confronting Reality: Master the New Model for Success. This is his second book written with management consultant Ram Charan. The first, the popular Execution: The Discipline of Getting Things Done, has sold 600,000 copies in the U.S., his publisher says.
The new volume is not a sequel. Bossidy, 69, says it focuses on determining if your business model needs radical reinvention or minor tweaks. Adds Bossidy, who serves on three boards and finds a little time for hitting golf balls: "There are a lot of businesses that, with their current strategy, can't go on existing." He cites Wal-Mart's (WMT) rivals in the food business as facing big challenges. As he sees it, the storm clouds roll in with surprising speed.
Braved the lines to see Harry Potter and the Prisoner of Azkaban yet? The popular series' third film, which opened on June 4, delivers as many magical gizmos as ever. But it may surprise you to learn that Harry's world, where flying cars and invisi-bility cloaks are the norm, isn't that far from our own.
Need an invisibility cloak to escape from work? Scientists at the University of Tokyo have invented an ingenious camouflage material that makes the wearer seem transparent by displaying the scene behind the wearer on the front of the material. A camera records the image, then sends it in real time to a projector that displays the image on the front. Although it works from only one side, the invention could help pilots see through the bottom of their planes to help improve landings.
More Potter-type technology is on the way. Making its film debut in the movie is Harry's Marauder's Map, a magical parchment that shows him where people are in his school. Polymer Vision, a unit of Royal Philips Electronics, is perfecting a screen that can receive up-to-the-minute locational info and be rolled up to fit in your pocket.
Even Potter's flying car has a rival -- sort of. The M400 Skycar from Moller International (MLER) in Davis, Calif., can travel on roads at 35 miles per hour, but its real purpose is to take off vertically from small spaces like parking lots, then cruise the skies at 350 mph. The company is hoping for approval from the Federal Aviation Administration.
Books, of course, are cheaper than flying cars -- even in Harry's world, where pictures have a way of talking and moving. New Zealand researchers have found a way to put 3-D images into books that talk and move. The name? Magic Book. Should be required reading at Hogwarts.
Is cyberspace any safer? For the third year in a row, attacks on computer networks have fallen. On June 10, the annual study of corporate security trends by the FBI and the Computer Security Institute found that 53% of 494 companies surveyed had unauthorized use of their systems in the past 12 months. That's down from nearly 60% last year, and the lowest since 1999. Likewise, losses from attacks were $142 million, way below last year's $202 million.
Why the drop? No one can say for certain. But Lawrence Gordon, a professor at the University of Maryland's Smith School of Business, says companies spend more wisely on security than they have in the past. "A lot of organizations are becoming savvier about security," he says. Maybe the good guys are winning.