Author: Ben Debski

Hybrid vs electric futures

Posted on by Ben Debski

The hard-charged hybrid
Toyota started it off in the late nineties with the Prius, the first mass-produced hybrid vehicle. Running on a cleverly managed engine system using electricity and petrol, it pioneered twinning a battery-powered electrical motor for shorter journeys and a fairly conventional petrol engine that took over for longer trips. To the astonishment of the automotive giant, the Prius became a huge hit with environmentally minded, deep-pocketed customers who prided themselves on driving a low-emission vehicle despite its staid performance.

And although it’s taken more than a decade for rival manufacturers to follow suit, they’re catching up fast in the biggest revolution in the automotive industry since the invention of the internal combustion engine, according to automotive analysts.

Among many other models coming on the market, Ford is set to release its C-Max Energi, a plug-in hybrid selling in the US for nearly $30,000, less a $7,500 tax credit. Toyota ultimately plans to “hybridise” its entire range of models. And General Motors is hoping its Chevrolet Volt, a mid-sized saloon, will become a world favourite.

The rush of models is a far cry from the early nineties when nearly all major manufacturers gave up on electric power. After dismal sales for cars such as GM’s EV1, named by Time as one of the 50 worst automobiles ever made, they binned their battery technology and focused on smaller, petrol-sipping cars. Indeed GM bought up its fleet of EV1s and turned them to scrap metal.

The automotive industry was, however, forced back to work on cleaner fuel solutions by tougher environmental regulations and fears about the availability of oil in the wake of Hurricane Katrina in 2005. Soon specialist energy companies were coming up with batteries that were sufficiently small, powerful and easily chargeable to give the industry hope.

The Volt is the result of much research from GM. Driven by an internal combustion engine married with an electric motor capable of 40 miles on a single charge, it’s starting to win over car buyers. Many commuting Volt-owners say that they rarely dip into the fuel tank.

“Gas-guzzler nothing,” responded one irate owner to a criticism of the car on an environmental blog. “I drive 34 miles to work and back, plug the car in, eat dinner, ready to go. We’ve only bought 30 gallons of gas [in six months].”

Although showroom prices for hybrids are generally higher than for petrol-powered vehicles, a Volt selling for nearly £35,000 [€44,300] in UK and Europe, compared with £17,500 [€22,160] for the battery-powered Renault Fluence, taking government subsidies into account, prices are expected to fall further. According to an analyst for TechNavio, a market intelligence company, hybrids will soon cost less than comparable petrol-powered vehicles. “This reduction in cost will fuel the growth of the global hybrid car market,” he said.

The big saving is in fuel. Depending on the model, hybrids use about a quarter less petrol than conventionally engined cars. For instance, the Ford C-Max Energi will cover 95 miles on a single gallon and 550 miles by employing both technologies.

And hybrids are more environmentally virtuous. Because most journeys can now be accomplished on the battery alone, exhaust emissions are way down on petrol-driven vehicles.

While electric cars undeniably suffer from an absence of glamour, seen as mainly small city cars for short commutes, the hybrid line-up can boast luxury executive saloons such as the Lexus CT200h and a handful of supercars such as Porsche’s 150mph Cayenne. More are coming round the corner like BMW’s Spyder i8 concept car, a rocket-quick car that will use the same amount of fuel as a small car.

The exemplary electric vehicle
It’s a big mistake to judge all electric cars by the clunkers of yesteryear, insist enthusiasts of battery-powered vehicles. Or, for that matter, by current sales. In July, for instance, the electric Smart ForTwo sold just six units in the whole of the US, while BMW’s Active E sold absolutely none.

Yet the tide is slowly turning. Until the past couple of years, the only electric vehicles in common use on the world’s roads were small trucks. The reason? The batteries weighed a tonne. In the absence of plug-in facilities elsewhere, cars had to be hooked into the household mains for a painfully slow charge that usually took all night. And even fully charged, they rarely ran for more than 20 miles.

But since giant energy companies started throwing billions of research dollars at battery technology, electrically powered cars are roaring onto the world’s roads. Of the automotive giants, the biggest adopter is France’s Renault, which is rolling out four electric cars, including the Fluence family saloon and the tough little Kangoo truck.

Although the price of battery-powered cars is usually higher than for conventionally powered vehicles, as it is for hybrids, the advantages are significant. Low-wearing electric motors require little maintenance and soon recoup the initial investment because of their long life. At two cents a mile or less, running costs are about six times less than those of ordinary petrol-powered cars.

Pollution is almost zero and, unlike earlier batteries, today’s lithium-ion ones are environmentally impeccable. They can be dismantled and fully recycled. Most convincingly, the batteries are now powerful enough to get city commuters to and from their destination, without a recharge. Recharging times are collapsing from whole days to mere hours, and supermarkets have started installing plug-in facilities in their car parks.

As electric cars proliferate, the economies of scale justify much heavier investment in technology that is making batteries ever lighter, more powerful and faster-charging by the year. China’s BYD group (Build Your Dreams) will soon launch its E6 model with a range of 200 to 250 miles. To boot, BYD says it will take roughly the time to drink a cup of coffee — about 10 minutes — to recharge to 50 percent capacity and 15 minutes to 80 percent. Mega-investor Warren Buffett is convinced — he’s a major financial backer of BYD.

With the help of design gems such as Pininfarina’s Bollore Blue Car, electric vehicles are shedding their earnest image. The chic four-seater derives its energy from a 50kw motor powered by a lithium polymer battery pack with a range of 150 miles. As an eco-bonus, the Blue Car also boasts roof-mounted solar panels. This has prompted Pininfarina to boost production to 60,000 units a year by 2015.

Like their hybrid cousins, electric supercars are throwing down the gauntlet to petrol heads. Tesla’s $109,000 Roadster is a blazing performer that can hit 60mph from a standing start in less than four seconds. A little-known virtue of battery power is that it delivers head-snapping, low-down torque.

BMW’s imminent Megacity is a low-slung coupe that will hurtle around the urban environment in total silence apart from the whoosh of its tyres. And for good measure, Swedish supercar manufacturer, Koenigsegg, is aiming to go to another level altogether. It is developing a solar-powered supercar.

Finally, another virtue of all-electric power is that it facilitates low-cost, low-volume production of highly individual forms of transport. And one of the best is the Aptera 2e, a head-turning, US-made three-wheeler with a fully-enclosed cabin resting on aircraft-type wheel struts. The single-seater Aptera will retail for about $27,000.

Nagoya sets MBA standard

Posted on by Ben Debski

Since its foundation, Nagoya University of Commerce and Business (NUCB) has been a pioneer in international education. Contrary to most business schools in Japan, which usually only offer programmes in Japanese, NUCB offers an MBA programme fully conducted in English.

NUCB’s English conducted MBA course, the Global MBA (Global Leader Programme), was ranked as the third best full-time MBA in Japan, as well as the best among one-year English-taught MBAs, by SMBG’s “Best Masters Rankings”. Internationally recognised, NUCB is the only Japanese business school to be accredited by both the AACSB and AMBA, as well as having a number of its Master’s courses continually rank in the Top 10 in east-Asia by Eduniversal.

Recipe for success
Adopting a case method style for its teaching, NUCB’s highly experienced international faculty of staff brings both global and Japanese insight into classroom.

“The case studies used and explained by the Japanese business professionals allowed me to get an insight into why Japan was able to become the second largest economy in the world in such a short period of time,” says Hungarian GLP alumnus, Halashi Gergo.

In pursuit of its goal of helping to produce future global leaders, the combination of global knowledge and Asian insights is reflected in all aspects of GLP’s research and teaching.

Caroline Pulg, German GLP alumna, says, “With the booming Asian economy, learning business skills in Japan has many advantages. For me, it will be a major benefit when going back to Europe, where business relations between east and west are becoming more and more important with every passing day.”

Prime location
Another unique aspect of NUCB is its widespread exposure to the real world. Its campus is located in the heart of Nagoya, the third largest city in Japan, known as the hometown of many leading manufacturing companies, which encourages students to get involved with the real business world. NUCB arranges corporate study tours for international students so that they can get a better perspective of what they have learned in class. Students visit international business firms such as Toyota and other long-established traditional Japanese companies.

In addition to having over 80 partner schools in 40 countries, students have numerous opportunities to study abroad as well as to learn from visiting professors from business schools around the world.

“Using the advantages that NUCB has with its global partners creates a unique opportunity to achieve a global mindset while networking with business professionals at the same time. I believe the skills you can collect during the programme gives you an incomparable advantage for becoming a global leader in the future,” says Halashi, who has expanded his network and successfully found a position as a consulting manager in Japan.

The international dimension of GLP – where studying among different nationalities with diverse backgrounds and cultures is common practice – helps to broaden student’s social and work-related contacts.

For more information
The NUCB Graduate School; Tel: +81-52-203-8111; mba@nucba.ac.jp; www.nucba.ac.jp/en; www.facebook.com/MBA.JP; 1-20-1 Nishiki Nakaku Nagoya,
Aichi 460-0003 Japan

Enterprise Architect sets new standards

Posted on by Ben Debski

It is a sunny morning in Toulouse, France and a technical working-group begins the day. The members in attendance are volunteers originating from 33 different countries, speaking five different languages. All have a personal interest in some aspect of geospatial analysis. Up on their screens is Enterprise Architect, showing a recent geo-specification model.

This model has been accessed, amended and updated by each member in their centrally hosted location from around the world; effectively being developed 24/7 over the past three months since the group last met. Progress has been swift. Using the readily available Enterprise Architect toolset, the team has not only modelled the needed specification, but they have also used the tool to solicit feedback from stakeholders, manage task allocations and generate all the specification documentation directly from the model.

This kind of scenario is becoming more commonplace for organisations. Individuals and teams based all over the globe are working towards common standards in industries ranging from telecommunications, utilities, healthcare, finance, geospatial analysis and defence. This collaboration is made possible by Enterprise Architect software from Sparx Systems.

The group’s business development manager, Ken Harkin, explains Sparx’s widespread involvement in standards, and the benefits that are made possible as a result of the firm’s range of solutions.

What purpose do standards serve and how do they help deliver value?
Widely accepted standards help foster product interoperability and system architectures that mitigate risks, simplify and reduce delivery time and yield a stronger ROI as global industries such as healthcare, retail, utilities, telecommunications and other sectors continue rapid modernisation programmes. Interoperable system architectures that share a common language and interfaces at a hardware, software and system level are essential for successful global industries.

New markets can emerge from the open access to information made available through interoperability. Many stakeholders can benefit from standards including domains that see the need to integrate and share information, and those vendors who deliver value solutions to the industry at every point in their relevant supply chain.

Conversely, a lack of interoperability reduces customer choice, new opportunities for developers, possibilities for technology convergence and generally limits the growth rate of the particular market in question.

How can stakeholders be assured that their voice is being heard?
Standardisation provides stakeholders everywhere with harmonised rules and tools to implement reliable and cost-effective traceability methods and provide a platform upon which to build new ideas and fully-realise exciting products and markets.

Standardisation helps change innovation into accepted market application.  As an agreed codification for action, standards help provide a benchmark against which inclusive evaluations and judgements may be made by the global community on technical criteria, products and services, systems and processes and business model transformation.

A common language and toolset is essential for a wide range of individual and group stakeholders to collaborate and remotely communicate their ideas on all of these issues while providing assurance that process changes are effectively audited. Sparx Systems Enterprise Architect provides such a toolset and facilitates this language of change.

What is Sparx Systems involvement in standards?
Sparx Systems has been a contributing member of the Object Management Group (OMG) since 2003 and helped pioneer much support for standards in 2002. The company supported UML and XMI, which helped many to enable the interchange of both data (models and model fragments) and meta-data positioning.

Enterprise Architect is based on open-standards and is designed to be used throughout the full lifecycle of a systems development cycle. Whether it be large-scale vertical markets such as utilities, healthcare, telecommunications, automotive, or the single developer – Enterprise Architect delivers cost-effective “out-of-the-box” management of the development lifecycle and provides direct traceability from one stage of the lifecycle to the next. Enterprise Architect is an open, standards-based modelling solution that enjoys popularity as the tool of choice for many standards organisations worldwide.

Do you have any instances of value realisation from standards development in the domains serviced by Sparx Systems?
Well concerning the value of geospatial standard’s to the industry, a study conducted by Booz Allen Hamilton on behalf of NASA in 2005 to assess the cost of implementing geospatial standards delivered some very positive conclusions.

“Overall, the project that adopted and implemented geospatial interoperability standards saved 26.2 percent compared to the project that relied upon a proprietary standard. One way to interpret this result is that for every $4.00 spent on projects based on proprietary platforms, the same value could be achieved with $3.00 if the project were based on open standards.”

More recently the Defence Geospatial Standardisation Framework was published in April 2012. This is a network of forums, processes and communication mechanisms to facilitate robust engagement and responsibility for enabling interoperability in the geo-domain, where this network can be enabled through the development, management, and implementation of new standards. As previously stated in a statement published in 2010, the application of a defence geospatial information and technology standard is vital to achieving a geospatially enabled and networked workforce.

In order to allow geospatial information to be delivered seamlessly across the network from the strategic to the tactical level, the capabilities that defence groups acquire in the future must be able to ingest standard data-formats.

This framework goes on to point out that non-compliance with standards will result in additional costs and delays in the acquisition of new systems. Once operational, non-compliant platforms adversely affect interoperability and create an ongoing requirement to convert proprietary data formats into standard data formats resulting in systems that are expensive and unsupportable in the long-term. It is important, therefore, that geospatial standards, including meta-data standards, are collaboratively developed, managed and applied throughout the defence sector.

How can Enterprise Architect help companies wanting to implement smart-grid technology in the future?
Today, power-supply companies face the daunting task of optimising their core processes as a matter of survival in a deregulated energy market. The task is to combine the large number of autonomous IT systems into a homogeneous IT landscape. However, because they do not use uniform data standards, conventional network-control systems can only be integrated through considerable time and effort.

Network-control systems with a standardised data format for source data based on the standardised Common Information Model (CIM), usually offer the best basis for IT integration. Enterprise Architect is being used to develop and maintain the CIM, which defines a common language and data modelling with the object of simplifying the exchange of information between the participating systems and applications via direct interfaces.

The standardised CIM data model offers a range of advantages for power suppliers and manufacturers as the model describes the electrical network, the connected electrical components, the additional elements and the data needed for network operation as well as the relationships between these elements. The Unified Modelling Language (UML) is used as the descriptive language.

In a McKinsey report published in 2010, optimistic projections were made that the smart-grid market would generate technology and services revenue in the order of tens of billions of dollars annually. However, this scenario ultimately depended heavily on the development of universally accepted standards.

What is Sparx Systems position on education with respect to standards?
Sparx Systems supports many other domains and makes Enterprise Architect technology available to those volunteers who represent various stakeholders and give their time to the standards development effort. We are currently supporting close to 40 industry domains through our standards development programme. We participate as fully as we can through involvement in industry key events and our education outreach programmes.

Still no answer for newspapers in digital age

Posted on by Ben Debski

Solving the problem of declining newspaper circulation in the age of the internet is something that has troubled media moguls the world over for a number of years now. Falling sales, crumbling advertising revenue and an entrenched attitude among those brought up in the internet age that creative content should be free have all contributed to the sense of urgency within the industry that a system needs to be devised to keep journalism both profitable and with its integrity intact.

Paywalls
Many organisations have attempted wildly different strategies to attempt to claw back some of the financial shortfall that the internet has created. Rupert Murdoch’s newspaper arm in the UK News International closed-off their flagship papers, The Times and Sunday Times, behind a paywall in 2009, arguing that the allowing free content online served by advertising was not financial viable. At the same time, they withdrew permission for Google to provide Times articles in search results, with Murdoch describing the search giant as a “parasite”.

Elsewhere, the New York Times placed a paywall over its website in 2011, allowing partial viewing of articles, which has been a popular system for rivals, such as the Financial Times and the Wall Street Journal. The NY Times paywall has been partially successful, seeing 16 percent growth during this year, although digital advertising plummeted 22.5 percent during the same period.

The success of their paywall has been unclear, with the paper reluctant to provide firm statistics on subscriber numbers. According to the Audit Bureau of Circulation, however, the paper received 132,000 digital subscribers by July 2012. This was stark contrast to the number of people reading online versions of rivals like the Telegraph, which saw just under 2.8m visitors in August. In September, Murdoch was forced to back down over his stance with Google, allowing articles in the Times to be partially viewed in search results, albeit keeping the paywall intact.

Broadband levy
Writing in the Guardian newspaper, British journalist David Leigh has suggested that broadband providers be forced to charge a small levy, perhaps of about £2 a month, which would then be used to fund journalism. Each news organisation would get money in accordance with their readership figures. Leigh writes: “A small levy on UK broadband providers – no more than £2 a month on each subscriber’s bill – could be distributed to news providers in proportion to their UK online readership. This would solve the financial problems of quality newspapers, whose readers are not disappearing, but simply migrating online.”

Obviously there are concerns about having a state-funding mechanism for news providers, bringing into question journalistic independence, but Leigh believes the model used for funding the BBC would sufficiently address these concerns: “The levy would, like the BBC, be operationally ring-fenced against ‘state intervention’, although it might well be subject to the same long-term political tensions as the BBC licence fee. That licence fee system still works more or less successfully, of course, just as the more extreme Nordic model of direct newspaper subsidy does.”

The Nordic model Leigh refers to is one born during the middle of the last century as a means to aid the newspaper industry from an increasingly competitive marketplace. However, the idea that a direct government subsidy for an industry meant to be holding it to account is surely not something to be encouraged. Likewise, the fact that the BBC license fee works in the UK does not mean that it is a system that could be transferred to the newspaper industry. It’s a format that has worked as a quirk of the British system, but not one that can be easily replicated abroad.

Paywalls may represent the most obvious system, but they neglect the fact that a whole generation has been brought up to expect content – be it music or news – for free. While subscription services like Spotify are becoming more popular in the music industry, paywalls have a long way to go before they are considered the norm. Closing off whole swathes of readers is not going to endear your paper with the reluctant-to-pay public, but a model like the New York Times, offering some free content in order to entice future subscribers may. Changing these habits is the real area that media companies need to focus on, and until that happens, newspapers are destined to struggle.

Global trade enters a new era

Posted on by Ben Debski

Landmark ECA and PXF deals though still dominated by private sector.

Historic news this August, as Russia officially became a member of the WTO, after twenty years of negotiations and debates over preferential treatment for domestic manufacturers.

A spate of major deals involving its oil, petrochemical and metals industries no doubt greased its path to WTO accession.

Putin has since done something of a diplomatic u-turn and is selling himself as a free-trade pioneer. In advance of hosting an Asia-Pacific Economic Cooperation (APEC) summit in Russia’s east coast city of Vladivostok, he asserted: “The very principle of free trade is undergoing a crisis. We regularly observe recurrences of protectionism and veiled trade wars instead of lifting barriers,” he said, adding that “it is imperative that we develop common approaches”. Presumably this signifies his intention to start dismantling some of the 55 border barriers, five import restrictions and 23 other protectionist measures Russia initiated 2011-12.

He continued, “Membership in the WTO gives us the ability to participate more broadly in setting the global trade rules – an issue that has been a focus of attention for APEC in the past,” Reuters reports on his public disclosure to The Wall Street Journal’s Asian edition. His inclusive vision includes a greater role for regional groupings: in Eastern Europe, a Customs Union and Common Economic Space between former Soviet republics of Russia, Belarus and Kazakhstan; in return, the US is pushing hard for a Trans-Pacific Partnership.

Larger state role in credit insurance
Europe is also looking to liberalise trade restrictions, specifically those regarding short-term credit insurance. Currently, EU governments are prohibited from intervening in “marketable” regions – those where the risk level and premium is not high enough to deter private insurance companies. However, in the current economic conditions many argue that there is little distinction between “marketable” and “non-marketable” regions. The EU has initiated a second round of consultations on freeing up the legislation, which triggered a range of responses from member states and corporations.

A statement from the Federation of German Industries (BDI) acknowledged the primacy of competition between private insurers, “as the market solution is always the best one for the consumer.” But it asserted that in cases of market failure “we need a predictable and reliable state backed export credit insurance, also in the short-term sector.” Credit insurance expert Peter Solomon, who represents export credit agency Aon, spoke exclusively to The New Economy: “From a UK perspective it’s not really necessary. The private market is meeting the needs of policy-holders. In other markets where the credit levels are not as satisfactory, it would certainly be of assistance.”

Italy was definitively in favour of the change. It wanted to reduce restrictions based on arbitrary categorisation – ST vs MLT, domestic business vs exports, and for ECA intervention to be considered whenever it is “complimentary to the market.” Though the state would not be allowed to monopolise the insurance market. “For each transaction, ECAs would provide terms and pricing in line with the market,” as well as a transparent accountancy process. The prospect of state authorities being accused of subsidising transactions was marked as something to be avoided at all costs.

A guarantee system is already installed in France, by which the government offers a service of “assurance” that commercial banks’ medium and long-term credit financing arrangements are concordant with market rates. It would not be too big a step for authorities to extend this scrutiny inwards to their own insurance arrangements. The European Banking Federation, which with 5,000 members represents 80 percent of the total assets and deposits in the EU and EFTA, also supported the initiative because it felt that “seismic shifts in market conditions” had made many short-term risks “un-marketable”.

Outstanding deals
Russian companies were prolific in negotiating contracts in the first half of 2012, with 11 outstanding deals in March alone. The EBRD collaborated with Sberbank on a $994m deal for petrochemical company RusVinyl, showing institutional European interest in funding development in the region. In March 2012, Trade Finance magazine applauded aliminium producer Rusal for forging a new Russian PXF record, (Power Shares in Developed Markets). After building on the debt restructuring agreed in December 2001, the company recovered sufficiently to attract major global interest. While international financiers footed the $3.75bn ‘Tranche A’ component, Russian lenders funded Tranche B for $1bn. Top law firm Clifford Chance negotiated for the lenders, while Cleary Gottlieb and Hamilton stood for the borrowers Rusal. With a wealth of other deals by companies including Taneco, Ferrexpo, VEB/Aommoni, Acron, Metalloinvest and Kaluzhskiy/VEB, Russia has earned its place in the trade establishment.

A project notable for the range of national interests represented by the backing export credit agencies (ECAs) is the $37.4m in finance for Ales Enerji’s Turkish power project. Danish and French ECAs provided 40 percent of the budget, for the purchase of aero-derivative gas turbine generators to be installed in a new Turkish power plant on the Aegean coast. The remaining 60 percent was backed by the US-owned Ex-Im Bank, largely because there was residual benefit on the export side to GE Packaged Power (GEPPI), guaranteeing employment for the American manufacturers’ 525 employees in Ohio and Texas. JP Morgan’s global trade unit, who provided much of the finance, pointed out that other US producers also benefited from the deal it negotiated: Wahlcometroflex, a GE supplier based in Maine, provided an exhaust bypass.

Unsurprisingly, Germany remained a big hitter in the trade finance arena, forging new links with South Korea. Shipping company Hapag Lloyd gained assistance from five banks to arrange a $925m loan underwritten by Korean export credit agency K-sure, to finance future payments on 10 vessels built by Hyundai Heavy Industries which is also based in Korea. These financial bonds will endure long into the future. The Ukrainian company Naftogaz muscled in on Russian gas reserves, securing a jumbo credit line of $2bn from Russia’s Gazprombank to purchase supplies.

Innovating in administration
Deutsche Bank helped solve the administrative glitches in Sri Lanka’s massive conglomerate John Keells Holdings (JKS), the largest listing on Colombo’s stock exchange. Previously, the process flow for supply-side payments was run separately from other payment workflows, through JKH’s subsidiary Infomate. Considering the range of services and sectors the company incorporates, this was just not efficient. By linking its existing processing system to Deutsche Bank’s enterprise resource planning platform (ERP), JKH can oversee all its transactions: in food and beverages; transport and leisure; plantation and investment services; business process outsourcing; financial services; and property developments.

Global financial messaging service Swift has selected its 2012 partner for best practice in corporate trade and supply chain finance, awarding it the coveted SwiftReady label. Surecomp’s multi-bank corporate finance solution COR-TF has won recognition, for its provision of automated handling of import and export letters of credit. The COR-TF platform reportedly reduces business risk through removing potential for human error. It also allows for automated handling of outward and inward collections and guarantees. Real-time information management is included in the package, presumably through use of front-line technology, Hana real-time analytics.

Sector to watch
Iron ore reached a high price in 2011, meaning that this year it presented an attractive investment prospect. Compare the two deals recently negotiated by Swiss iron ore mining company Ferrexpo, which saw a record-breaking 65 percent revenue increase in the first half of 2011. In 2010 Deutschebank secured a $350m loan with a margin of 550bps, with an 18-month grace period amortised over 24 months, for Ferrexpo’s Ukrainian subsidiary. This year, a coalition of ING, Société Générale CIB and UniCredit negotiated a Pre-Export Financing (PXF) deal priced at just 225 bps, sealed in September just before the market entered a downturn.

A report by Ernst and Young on projected changes, 2012-20 ‘Trading Places, the emergence of new patterns of international trade,’ did foresee the expansion of manufactured goods, specifically the machinery and transport sector, as making the largest contribution to trade over the next ten years. It asserted, “This reflects both the strong growth in demand for consumption and investment goods expected from the rapid-growth markets and the potential to fragment the supply chain as companies increasingly produce components in different locations.”

There would also be a geographical shift. It predicted that Europe’s exports to Africa and the Middle East by 2020 would be almost twice as large as Europe’s exports to the US. The report foresaw the fastest-growing trade route would be between India and China, with Indian exports of goods to China “growing at an average annual rate of almost 22 percent through to 2020, while flows in the opposite direction expand by 18.5 percent per year.” Its professional advice was that “Companies will need to gain footholds in rapid growth markets at an early stage, while they still have the opportunities to establish a significant market presence and gain market share.” So it makes sense for European countries to remove any remaining obstacles to financing trade with these regions, even for their sovereign governments with their seemingly endless credit lines.

Hulu at a crossroads

Posted on by Ben Debski

As online TV hits the mainstream, established services are frantically trying to solidify their positions on the content pile. Hulu, a partnership between broadcasters NBC, Fox and Disney, has so far been one of the leading providers of online TV, offering programmes and additional content from each of the studios.

However, a leaked memo that emerged over the weekend hints that the studios are getting restless with the management style of CEO Jason Kilar. According to the internal memo, the parent companies are discussing a “transition plan for a new CEO,” as well as possible candidates to take over from Kilar.

Hulu currently has around 1.5 million subscribers, and Kilar said earlier in the year that his record spoke for itself: “We grew the business 60 percent from 2010 to approximately $420m in revenue in 2011.”

The company is going through a transition phase, with the management pushing through a buyout of investors Providence Equity Partners, which is set to be finalised in September. Kilar has clashed with the studios over the amount of adverts that they insist placing within each programme, and it is thought that he has become fed-up with the situation.

Kilar would be set to receive around $100m from the selling his equity, and the leaked memo implies that Disney and Fox, who both own around 30 percent of the company, are making contingency plans if Kilar does cash out.

Hulu has faced increased competition from services like Netflix, while Apple is expected to beef up their TV offering in the coming months.

Press print for dinner

Posted on by Ben Debski

With global food shortages set to get worse over the course of the next few decades, researchers are frantically looking at ways to provide for the world’s ever increasing population.

One group of scientists are looking into a particularly disturbing way of creating meat, and have received the backing of one of the tech industry’s most colourful figures. Modern Meadow, a US start-up, is looking at ways to manufacture cuts of meat through three-dimensional bio-printing, and believe that with additional funding and research could lead to significant breakthroughs in curing world hunger.

Peter Thiel, the founder of online payment system Paypal and a board member at Facebook, believes they may be right, and has pumped over $250,000 into the company through his Thiel Foundation. In a statement, the foundation said: “Modern Meadow is developing a fundamentally new approach to meat and leather production that is based on the latest advances in tissue engineering and causes no harm to animals.”

Through their Breakout Labs initiative to look for the latest technological innovations, Thiel’s organisation has stepped in to help Modern Meadows, as other investors seem cautious. The start-ups Andras Forgacs said: “Breakout Labs is a much-needed source of funding and support for emerging technologies like ours. Investors across the board have become more risk-averse and yet early funding is critical to enable truly innovative ideas.”

Lindy Fishburne, a director at Breakout Labs, added: “Modern Meadow is combining regenerative medicine with 3D printing to imagine an economic and compassionate solution to a global problem.”

Food prices have continued to rise around the world, as droughts affect crops in the US and demand grows in emerging countries. While something clearly needs to be done to address the issues of food shortages, persuading consumers to eat synthetic meat might be a particularly hard sell.

Are smartphones reading you?

Posted on by Ben Debski

Using tracking data from peoples’ phones, a team of British researchers are developing an algorithm that predicts where the user will be in 24 hours time. The prediction is surprisingly accurate, with the average error down to a mere 20 metres from the correct location after three hours. Now the researchers that developed it are planning to take tailored advertising to new levels. Businesses will be able to predict where consumers are going, and target them with location-specific offers. What’s more, they won’t even need to speak to the consumer in order to produce this personalised advertising.

As understanding of human behaviour increases, the methods of exploiting it for commercial gain are too. Earlier in the year, Target was revealed to be collecting and interpreting customer data so effectively that they can not only tell with a good degree of certainty when a customer is pregnant, but also when their due date is likely to be. Such technology, once perfected, will enable advertising on a person-by-person basis that suits the consumers’ needs as well as their schedule.

Most people follow consistent routines over time but breaks in those patterns have been hard to predict with accuracy. That has changed, though, with the recent research undertaken by Mirco Musolesi, Manlio Domenico, and Antonio Lima. The research combines location data from a participants’ phone with that of their contacts. By looking at the correlation between users they can forecast where a person will be going over the next day.

Musolesi has worked in the area of human mobility prediction for several years and leads a group at Birmingham University, working in large-scale data mining, networks, and systems. He previously developed a model of human mobility based on social networks: “One of the main goals of my research work is to devise models that are able to exploit the availability of the exponentially increasing amount of multi-dimensional information about users and their environment, such as location, personal profiles, social network data and so on.”

“In the study we consider pairs of users, such as a user and his friends. You might get an improvement if you consider more than one user but you might introduce noise if the movement patterns are not sufficiently correlated. The key problem is that if you consider more than two users, the underlying model gets more and more complex and a very large amount of data is then necessary to train it.” The researchers are currently working to resolve these issues.

This could lead to uses such as individual-specific advertising that targets consumers based on where they are likely to be at a future time: “Since we are able to predict the future location of a user, an application can use the algorithm to send adverts to users in the morning about lunchtime offers of restaurants in the area where a user will go.”

That offer could be further tailored based on what restaurants the consumer usually eats at, and what food they prefer. The ideas are still in infancy, and more uses are arising: “Other applications are non-commercial ones such as targeted information related to concerts or exhibitions in areas of the city at times where a user is likely to be in the future.”

“It might also be used to predict the future locations of events in general. For example you can apply the algorithm to predict the future location of a criminal hotspot.”
Musolesi thinks users should be allowed to opt-in rather than have their data automatically shared, citing privacy as one of his main concerns: “One possibility is to share mobility information among friends and use encryption for data sharing, especially of GPS locations.”

Consumers are already sharing location information through social networks and receive offers for doing so. Forecasting their movements is likely to be a blessing for both parties; customers get relevant and interesting offers while businesses get exposure.
Musolesi stated that they are thinking of providing a free, for the time being, API (Application Programming Interface) to third-party developers of apps. This would open the doors for all manner of industries wishing to predict the movements of smartphone users.

Over the coming months the researchers will be testing more refined techniques for prediction in order to reduce variance between results. Musolesi hopes the technology may be commercialy available within two years. Until then, consumers will have to decide for themselves where they want to eat lunch.

IBM shows faith, invests in Kenya

Posted on by Ben Debski

Tech firms around the world are continuing to look for the next emerging market to grow their business in, and East Africa is seen as one area with a burgeoning community of tech savvy firms.

In order to harness this talent, IBM has announced plans to open a research laboratory in the Nairobi. As part of their Smarter Planet strategy, IBM has already opened 11 research centres around the world. Although it has presence in 20 African countries already, Nairobi will host its first search centre on the continent. Although no figures have been released so far, IBM currenly spends around $6.5bn a year on research initiatives across the globe.

In a joint agreement with the Kenyan government, the firm will have as many as 50 researchers working in the centre over the course of the next five years. The Kenyan government is eager to build modern industries in the country, and has already set up its Vision 2030 initiative to create a more “knowledge-based economy.”

IBM’s Dr Robert Morris said the reasons for selecting Kenya was their long-term vision for the sector: “We choose Kenya because of the country’s ability to execute, taking innovation and using it. Kenya’s strategy of the Vision 2030 was a great long term vision accompanied by short term executable plans, that is why the country emerged top in our hunt to set up a lab in Africa.”

Kenya’s president, Mwai Kibaki, welcomed IBM’s plans to invest in their tech industry: “We look forward to delivering world-class research and innovation as part of IBM’s Smarter Planet initiative and playing an important role as an IT leader on the African continent.”

Driverless cars break market

Posted on by Ben Debski

Although the cars operate automatically, they have previously required two operators to travel in the car and take control when needed, which they do by pressing the breaks or turning the wheel. The cars use video cameras, radar sensors, and laser range finders to detect other traffic and react to vehicles around them. Google cars are being trialled in Nevada, both on test tracks and public roads.

The recent achievement of the 300,000 milestone has seen Google grow increasingly confident in the safety of the complicated algorithms that run the driverless vehicles, and they have announced that the cars will soon start to be used by single operators for things such as their morning commute. During all those driverless miles there has only been one crash; a five-car-accident near to the California-based Google headquarters. Luckily for Google’s driverless car project, the accident was whilst the car was under human control. Road collisions are caused by human error on 90 percent of occasions, and autonomous cars may, in the future, completely remove the risk of traffic accidents. Google is now planning to further develop the systems to handle tricky road conditions such as ice and construction work.

Last year, Google lobbied in Nevada for bills that would make driverless vehicles legal on public roads, and were rewarded this May with the first US license for a driverless vehicle

Volvo has taken a less literal approach to the challenge of developing a driverless car system and has had recent success, as reported in the summer issue of The New Economy. The joint venture, named SARTRE (Safe Road Trains for the Environment) is a three year project launched in 2009 and funded by the European Commission. It brings together the efforts of Ricardo UK Ltd, Applus+ IDIADA, Tecnalia Research and Innovation, Institut für Kraftfahrzeuge Aachen, SP Technical Research Institute, Volvo Technology and Volvo Car Corporation.

The project aims to reduce congestion, environmental damage, and traffic accidents. A recent SARTRE trial saw a convoy of un-manned and wirelessly linked Volvo’s drive 125 miles along a Spanish motorway, following a lead car driven by a professional racing driver. Such a system isn’t entirely driverless and relies on the capabilities of the driver in the lead vehicle of the so-called “road train” to lead the rest of the “platoon” of cars, known as the slave vehicles. Up to eight vehicles can be used in the road train, allowing the drivers of the trailing cars to concentrate on other things, or to not be there at all. Such a system could essentially allow a lone truck driver to transport eight-times the amount of cargo as usual, in the same amount of time as their normal journey.

Physical safety issues may not be the only barrier for companies attempting to develop autonomous vehicles, as the developments in the technology are at risk of outpacing current legislation. Last year, Google lobbied in Nevada for bills that would make driverless vehicles legal on public roads, and were rewarded this May with the first US license for a driverless vehicle. Nevada is currently the only state to develop such regulations for driverless vehicles.

Its unclear how many miles will need to be completed in total, but the Google fleet may eventually clock enough miles to convince safety-conscious legislators around the world that they are a viable transport option.

Google and Volvo aren’t the only companies attempting to drive autonomous vehicle technology forward. General Motors intends to provide consumers with semi-autonomous vehicles by 2015 and fully autonomous vehicles by 2020. They are currently developing the EN-V (Electric Networked-Vehicle), a futuristic-looking autonomous vehicle. EN-V’s will communicate with each other in order to allow platooning similar to the Volvo road train, and will be able to come to the user when called by phone. Toyota has also entered the race, and is developing the AVOS – a car which can drive and park itself as well as return to its owner. BMW has similarly been working on an automated vehicle, which last year drove itself from Munich to Ingolstadt.

Mercedes-Benz unveiled their Dynamic & Intuitive Control Experience – DICE – earlier in the year. DICE is a gesture controlled social media, infotainment and navigational hub for use in the car. Although Mercedes’s DICE system is ready to use, they are waiting for driverless technology to catch up so that drivers can make use of its hands-free functionality.

Driverless technology may not yet be perfect, but the recent progress and confidence of the companies developing the products suggests we may see it by the end of the decade. This opens doors both for commuters who want an easier and safer route to work as well as companies wishing to transport more cargo for a fraction of the labour cost.

Biofuels coming, but at a cost

Posted on by Ben Debski

The need to find an alternative source of energy to power the world, while having a reduced impact on the environment, is one that has become increasingly stark over the last decade.

With soaring oil prices, a need for energy independence, and the effects of global warming, governments in developed countries like the US and UK have enthusiastically supported the biofuel industry, in the hope that it will prove a an effective source of energy.

However, the benefit of biofuel comes at a significant cost. With the worst droughts hitting the US in 50 years and with food shortages hitting poorer parts of the world, in particular the Sahel area of west Africa, should we really be using up food in order to power our first world technologies?

The biofuel industry accounted for 2.7 percent of the world’s fuel use in transportation, in particular ethanol and biodiesel. The EU currently produces the most biofuel production, accounting for 53 percent of the world’s output.

Whilst the growth of the industry reflects people’s desire to move towards more sustainable sources of energy, it seems wasteful to use up food that could otherwise be given to those that severely impacted by famine.

The US is one of the world’s largest food producers, but policymakers have swung their support behind the biofuel industry in the hope that it will free them from a reliance of importing energy from abroad.

The UN has called on the US to stop biofuel production as a result of drought that has destroyed crops across the country. The UN’s Food and Agriculture director general, Jose Graziano, told the FT: “The worst drought for 50 years is inflicting huge damage on the US maize crop, with serious consequences for the overall international food supply.

“The situation reminds us that even the most advanced agricultural systems are subject to the vagaries of the weather, leading to volatility in supplies and prices, not just on domestic markets, but also internationally.”

Google restructures Motorola

Posted on by Ben Debski

After Google paid $12.5bn for Motorola Mobility in May, it was expected to bring about a range of changes in order to reverse the fortunes of the one-time leading mobile phone maker. This week, the first wave of this restructuring will see nearly 4,000 members of staff lose their jobs, according to technology website AllThingsD.

Google placed their former head of sales, Dennis Woodside, as head of the company after completing the deal in May and tasked him with reviving a mobile phone manufacturer that had lost significant ground to new entrants like Apple, Samsung and HTC. Apple and Samsung alone have secured around half of the smartphone market in the US, while also taking up to 90 percent of the industry’s profits.

Speaking to the New York Times about the future of the company, Woodside said: “We’re excited about the smartphone business. The Google business is built on a wired model, and as the world moves to a pretty much completely wireless model over time, it’s really going to be important for Google to understand everything about the mobile consumer.”

Only time will tell whether Google will succeed in making Motorola profitable again, but it hopes that by cutting around 20 percent of the company’s workforce it will result in a more efficient organisation.