VMware to pay $1.26bn for Nicira

VMware, the market leader in software that allows users to virtually access computers, is hoping that its acquisition of Nicira for a comparatively huge $1.26bn will help it dominate the virtual networking space.

Virtual computing, which allows a single computer to act as though it is many computers, allows for far greater portability and cost effectiveness for users. Through the use of cloud computing, VMware has dominated this market, launching in 1998 and going on to work on all major computer operating systems. Last year, their total revenues were reported to be nearly $3.77bn.

Nicira was launched in 2007 with a $50m start-up fund, with one of VMware’s original founders, Diane Greene, one of the early investors. Their niche is in virtual networking, which looks to transport large files and systems over a virtual infrastructure.

Marc Andreessen, an investor in Nicera, told Forbes: “Nicira validates the idea of software-defined networking,” Andreessen says. “It creates a new industry for networking software. There’s all kinds of benefits for customers. It’s much easier to deploy a network. It pulls a lot of the logic from the routers and switches to the software.”

Announcing the deal yesterday, VMware’s CEO Paull Maritz said: “VMware has led the server virtualisation revolution, and we have the opportunity to do the same in data-center and cloud networking. The acquisition of Nicira adds to our portfolio of networking assets and positions VMware to be the industry leader in software-defined networking.”

Amazon’s vote of confidence for London’s Silicon Roundabout

In a few weeks time, when the London Olympics come to an end, the government hopes that part of the Olympic park will be converted into a creative hub for tech companies.
Prime Minister David Cameron, fearful that many of the buildings constructed for the Olympics might sit unused once the games are over, wants to convert the vast media centre in Stratford into a place where tech start-ups can grow together, swapping ideas and advancing the UK’s burgeoning tech industry.

The trouble is London already has a tech hub, a few miles away in Shoreditch. Dubbed Silicon Roundabout, the area houses many innovative start-ups that grew independently of any government help. These include music social network Last.fm, which US media firm CBS bought for £140m in 2007; popular Twitter app Tweetdeck, and online card maker Moo.com.

A recent report by think-tank The Centre for London estimated that Silicon Roundabout employs a total of 48,000 people, with 3,200 firms operating in the area. Creating a digital hub nearby would threaten this thriving tech community, the report argues, dispersing the creative types that have propelled the area into one of the world’s most important development areas.

Last week, online retail giant Amazon announced plans to open a huge base for design and development near the Barbican, a short walk from Silicon Roundabout. This is a significant move, as it represents a massive vote of confidence in the area, while potentially dealing a blow to Cameron’s plans for the media centre in Stratford.
Announcing the new 47,000 square foot hub, Amazon spokesman Paul Byrne said: “London is a hotbed of tech talent and testament to that fact is Amazon choosing the capital as the location for the new global digital media development centre.

“Innovation is part of the Amazon DNA and we are creating a British centre of excellence to design and develop the next generation of TV and film services for a wide range of digital devices.

Kremlin seize control of the internet

With the internet providing a platform for political opposition, politicians in Russia have sought to gain greater control over what can be viewed and discussed online.

This week, the upper house of the Russian parliament passed a range of bills that would allow the government to block websites deemed dangerous to children, as well as repealing former President Dimitri Medvedev’s relaxing of slander laws.

Russia’s most popular websites, including blogging site LiveJournal and search engine Yandex, protested against the passing of the bills, which they said would “lead to the creation of a Russian analogue to China’s great firewall.” However, this seemed to make little impact on politicians, who passed the legislation with 147 votes in favour, three abstentions and not a single opposition vote.

Censorship of the internet has grown in recent years in authoritarian countries like Russia and China; perhaps conscious of the effectiveness social media has had in mobilising dissidents in politically fragile countries in the Middle East.

China has been particularly strict in monitoring the internet activities of its citizens, as well as cracking down firmly on those that break the rules. According to Amnesty International, China “has the largest recorded number of imprisoned journalists and cyber-dissidents in the world.”

The UN responded to the law change by stating its concern that Russia was slipping back towards its Soviet past. Navi Pillay, the UN’s high commissioner for human rights, said: “In just two months, we have seen a worrying shift in the legislative environment governing the enjoyment of the freedoms of assembly, association, speech and information in the Russian Federation.

“I urge the government to avoid taking further steps backward to a more restrictive era.”

Burying global warming at the bottom of the ocean

A team of German researchers claim that fertilising algae found at the bottom of the ocean with iron could lock away carbon dioxide, helping combat the effects of climate change.

The method has been looked into many times over the years, and it was thought that it wasn’t a realistic form of geo-engineering. However, in February 2004 a team of scientists fertilised 167 square kilometres of the Southern Ocean with several tonnes of iron sulphate.

Eight years later and the results have started to show that algae absorbs carbon dioxide, and even when they die the carbon remains at the bottom of the ocean for centuries.

The research was carried out as part of the European Iron Fertilisation Experiment (EIFEX), which is one of many studies look at technical ways to reverse the effects of climate change. The initial theory behind this research stems from the late oceanographer John Martin, who suggested in 1988 that iron deficiency limits phytoplankton growth in parts of the ocean.

Announcing the research in the Nature Journal, marine biologist Victor Smetacek said that further experiments needed to be carried out to see what effects adding iron to the sea would have on other organisms: “We just don’t know what might happen to species composition and so forth if you were to continuously add iron to the sea. These issues can only be addressed by more experiments including longer-term studies of natural blooms that occur around some Antarctic islands.”

There are some sceptics, however. The University of Essex’s Dr Michael Steinke told the BBC that it was unlikely that this new research would be a guaranteed tool in the battle against global warming.

He added: “Of the twelve fertilisation experiments of this kind, this group’s experiment is the only example to date that demonstrates the all-important carbon burial in the deep sea sediments, away from the atmosphere.”

Can Mayer shake up Yahoo?

When Marissa Mayer agreed to join Yahoo from rival Google on Monday, she would have been fully aware of the task that faced her.

Announcing their quarterly figures yesterday, Yahoo’s revenues and net income were at similar levels to the previous year, although at $1.22bn and $228.5m respectively, were better than many analysts had predicted.

The internet giant has failed to grab a significant niche online, attempting to cover as many services as possible, not particularly well, as opposed to just one. In contrast, Mayer’s former employers developed their business around her former department, search, and grew into other areas from there.

It is Yahoo’s identity that has proven problematic for the Silicon Valley firm, with the company offering traditional online services like search and email, alongside media and content. It is hoped that Mayer, 37, will be able to bring some of the magic that helped Google to become such a significant player online and to attract advertisers back to Yahoo’s platform.

Upon joining, Mayer said: “Yahoo has a very healthy search advertising and display advertising business. I’m interested in what Yahoo can do with video and mobile, both of which are very promising.”

However, she is the fifth chief executive to head the firm in the last five years, and so finding a clear path in such a muddled company may prove an insurmountable challenge, not least with the news that she joins with the added challenge of being pregnant.

Open-access science research gets UK backing

The British government has announced plans to allow members of the public to access scientific research materials online for free by 2014, in the hope that access will inspire innovation and the commercialisation of work that has already been paid for by taxpayers.

The research is traditionally published in science journals and requires people to pay an additional subscription to gain access to it. However, as the research has been paid for already by taxpayers, critics argue that it should already be freely available. Minister for Universities and Science, David Willetts told the Guardian newspaper: “If the taxpayer has paid for this research to happen, that work shouldn’t be put behind a paywall before a British citizen can read it.”

The government plans to pay a £50m a year subsidy to the science journals in order to provide this access, which is hoped will be used by universities and businesses. Willetts believes it will also boost the British economy: “Removing paywalls that surround taxpayer funded research will have real economic and social benefits.

“It will allow academics and businesses to develop and commercialise their research more easily and herald a new era of academic discovery.”

There has been criticism, however, that the funding for this access will come out of the existing science budget, which may lead to less extensive research. Currently, universities pay £200m a year for subscriptions to research information.

Open-access to scientific research is a hotly debated subject in many countries, with many advocates in the science and education communities in both the US and throughout Europe. The EU is set to launch its €80bn research program Horizon 2020, which will allocate funds to projects from 2014 until the end of the decade, and it is unclear whether there will be an open-access mandate.

Professor Adam Tickell, pro-vice chancellor of research at Birmingham University and member of Finch group that advocated open-access, added: “If the EU and the US go in for open access in a big way, then we’ll move into this open access world with no doubt at all, and I strongly believe that in a decade that’s where we’ll be.”

Apple returns to green standard

Being seen to be green is something that many firms are eager to adhere to, with the positive PR making them appear less like giant, uncaring corporations and more conscientious about the world the operate in. However, signing up to strict industry standards can prove troublesome when a company wants to launch a new product.

When Apple helped to launch the Electronic Product Environmental Assessment Tool (EPEAT) registry in 2006, it was praised for pioneering a greener attitude from tech companies. The registry was designed to allow consumers to evaluate the effect products have on the environment, helping those with greater concerns to buy greener electronic devices.

Apple, however, fell foul of the system last week, and incurred a significant PR blow. Announcing that they were leaving the standard, thought to be as a result of the design of their new line of Macbook Pro laptops, the California-based firm claimed that they were still leading the way in other areas of environmental design.

However, when local government officials in San Francisco announced they were banning government agencies from purchasing Apple products as a result of the withdrawal, the company came in for a great deal of criticism.

Now, Apple has performed a dramatic u-turn, publishing a letter on their website from Bob Mansfield, its senior vice president of hardware engineering. He says: “We’ve recently heard from many loyal Apple customers who were disappointed to learn that we had removed our products from the EPEAT rating system. I recognize that this was a mistake. Starting today, all eligible Apple products are back on EPEAT.”

The decision is a blow to Apple’s credibility when it comes to green policies, as it sends out the message that the company is more concerned with how it is perceived by its customers than any genuine concern for committing to environmentally friendly rules.

However, the head of EPEAT, Robert Frisbee, welcomed their return: “We look forward to Apple’s strong and creative thoughts on ongoing standards development.”

Cataloguing food bacteria

Tracking the cause of food related illnesses can be difficult, with foods containing huge amounts of different bacteria. However, researchers at a US university hope they will soon be able to identify the origin of most of the disease.

An extensive new database at the University of California is being set up to help collate the genetic code of hundreds of thousands of bacteria found in food.

The data will allow scientists to trace the bacteria to the specific food it was carried in, as well as the country it originated in. As many as 100,000 different genetic codes of bacteria are expected to be collected, a significantly higher number than the 1,000 identified so far. In Salmonella there are thought to be as many as 2,700 different types of gene code.

The Food and Drug Administration (FDA) described the plans as “a big deal form a scientific standpoint”. Dr Steven Musser said that the current database at the Center for Disease Control and Prevention only carries partial gene maps, which is not enough information to trace the origin of the bacteria. The new database, which will be publicly available, will greatly improve that.

Food-based diseases strike down as many as 30 percent of developed countries populations every year, with approximately 76 million cases in the US annually. However, it is in developing countries where the impact is felt worst. Although hard to estimate the global figure for food-related illnesses, it is thought that in the year 2000 as many as 2.1 million people died from diseases carried in food.

Identifying Alzheimer’s early

Researchers have discovered a series of signs of Alzheimer’s that can be identified up to 25 years before symptoms occur.

The research, by a group of US scientists at the Washington University School of Medicine in St. Louis, shows five key indicators in spinal fluid and brain scans that could help us understand better how the disease develops and what types of people are more susceptible to it.

The degenerative disease, which causes severe memory loss and dementia typically after the age of 65, has no known cure. Recent figures show around 27 million sufferers of the disease worldwide.

The new study, which saw 128 patients from families considered a high risk of the disease, is an important breakthrough, as it will enable scientists to trial drugs on sufferers earlier in the diseases onset.

Dr Randall Bateman, professor of Neurology at the university and the author of the study said: “A series of changes begins in the brain decades before the symptoms of Alzheimer’s disease are noticed by patients or families, and this cascade of events may provide a timeline for symptomatic onset.

“As we learn more about the origins of Alzheimer’s to plan preventive treatments, this Alzheimer’s timeline will be invaluable for successful drug trials.”

The Alzheimer’s Society welcomed the news, with Professor Clive Ballard adding: “This important research highlights that key changes in the brain, linked to the inherited form of Alzheimer’s disease, happen decades before symptoms show, which may have major implications for diagnosis and treatment in the future.

“There are also good indications that these findings could apply to people with non-hereditary Alzheimer’s disease, but we can’t yet be sure. Further research into this complex condition is needed to confirm a definite link.”

Europe looks for smarter cities

Creating technologically advanced, smarter cities is something that many rapidly growing emerging countries are pushing ahead with. However, with populous cities throughout Europe that have grown over the course of centuries, it is harder to integrate new transport, energy and environmental systems without causing major disruption.

The European Commission wants to change this, and has set up the Smart Cities and Communities European Innovation Partnership (SCC) to help finance projects that will help address the problems of pollution, congestion and energy efficient buildings.

The idea is that research will be brought together to help develop projects that will demonstrate to cities how they can improve their infrastructure. Currently, many cities and businesses are reluctant to invest in innovative projects that may cut costs in the long-run, but would require significant initial investment. To help speed things along, EU funds of €365m have been set aside for the initiative in 2013, a massive increase from the €81m for this year.

Gunther Oettinger, the EU’s Energy Commissioner, said: “Innovation drives Europe’s competitiveness and is the best means of addressing energy efficiency. Thanks to this partnership, high efficiency heating and cooling systems, smart metering, real-time energy management, or zero-energy buildings, neighbourhood solutions will spread among more and more European cities.”

Transport Commissioner Siim Kallas added: “Transport is the lifeblood of every city for people and business. But Europe’s cities suffer most from road accidents, congestion, poor air quality and noise. We need to drive forwards the research and innovation that can bring us to our goals of CO2 free cities, phasing out conventionally fuelled cars from city centres, to smart charging of electric vehicles and smokeless silent buses.”

The need to restructure many cities’ infrastructure is important, with pollution and congestion creating inefficient and costly places for people to live. However, persuading governments to invest in this innovation will be hard, particularly at a time of such financial difficulty and short-term politics.

Medicine ensures safe sector

There have been many recent, truly remarkable developments in global healthcare. Rather than stonewalling responsibility for the poorest regions in the world, leading companies are embracing the opportunity for serving low-income populations with specialised products, new distribution models and affordable pricing. In short, they have found new ways to serve 90 percent of the world’s population that may have been previously overlooked.

Healthcare as an industry is seen as an economic growth engine for developing nations with domestic as well as export income benefits. The evolution of emerging markets has created new challenges and opportunities for companies, and they’ve made significant strides into particular regions such as Brazil, China and India. By introducing new products into these nations, these companies are often establishing deeper ties including the acquisition of domestic healthcare manufactures, API (active pharmaceutical ingredients) sourcing; construction of manufacturing plants and research facilities; partnerships with governments and domestic producers and assertive product positioning with healthcare professionals, players and patients.

“These healthcare companies exemplify the principles of shared value creation,” said Mark Kramer, co-founder and MD of FSG. “They are re-conceiving products and markets, re-inventing their value chain, and strengthening local healthcare clusters in ways that contribute both to the profitability of the business and the welfare of society.”

For example, one of the UK leaders in diagnostic solutions, Roche, is piloting a new breast cancer screening process in Thailand and GE are working on low-cost, portable medical devices such as a handheld ultrasound machine that can be used in remote rural communities and transmit pictures to clinics for diagnosis and study.

Merck has developed tiered pricing models to drive sales volumes for its drugs in emerging markets and GlaxoSmithKline also sells millions of products annually through a similar system, and a newly designed low-cost sales force and risk-sharing arrangement.

Supported by advanced clinical and technological resources as more and more companies become active participants in shaping efficient and effective healthcare systems, governments with ownership stakes in domestic pharmaceutical manufacturers are able to expedite policy decisions and decide more treatment options. Coupled with their formal healthcare benefit plans, they are able to create new and efficient services for the patient population. This cyclical progression is beginning to share efficient and effective healthcare systems in developing nations.

For example, Swiss-based Novartis hired hundreds of people to provide health education to remote Indian villages, addressing previous medical constraints that affected people living in that area, in order to distribute drugs there, and in recent months, Eli Lilly & Co announced a $30m initiative to educate healthcare providers and patients about non-communicable diseases, working with governments to improve conditions for chronic disease care in four-emerging markets. In May, the company opened a new diabetes-focused research and development centre in Shanghai, China showcasing its significant and sustainable commitment to Asia.

Sustainable systems
To be competitive, healthcare companies need to quickly identify when “emerging market” nations mature into ‘intermediate’ or ‘established’ markets, adjust their business models accordingly and re-position their brands to keep pace with evolving demands and maintain their lead in the global marketplace. Many emerging markets have already entered a new phase of existence and are no longer open field-running opportunities of revenue for companies headquartered outside their borders. They are quickly maturing due to governments and healthcare communities becoming directly involved with cost, outcome assessments and more establishment of care and payer structures; an increasing number of people with greater access to care, a more fortified relationship between domestic and foreign healthcare; more permanent industrialisation and modernisation; and greater access to advanced biological and IT technology. This evolution has created new business environments with opportunities for healthcare companies and global brand management.

About one third of the population of Brazil has health insurance; 75 percent is through commercial operators or companies with self-managed plans. Despite Brazil’s Minister for Health and Aging administering a national health policy where healthcare can be obtained through private and government institutions, decentralisation of healthcare is widening, with more of it overseen by individual states. The government strongly supports the manufacturing and use of generic drugs within the nation’s healthcare system, and 15,000 pharmacies participate in “Pharmacia Popular” and “Health Has No Price” state programmes which distribute products at minimal or no cost to patients.

China has a three-tiered distribution system to treat the 20 percent of the world’s population who live in the country, with over half of all private healthcare paid for by the people themselves. The system has become increasingly united via enhanced information systems from healthcare companies, who offer improved logistics and reporting. There are 3,000+ drug companies with complete product development, manufacturing and distribution capabilities for domestic needs as well as global export. A very large portion of the market is in hospitals and hospital-based pharmacies with a rapidly growing retail pharmacy segment.

The remarkable growth of the private health sector in India has come at a time when public spending on health care at 0.9 percent GDP is among the lowest in the world. However, while the upper and middle classes have access to a high level of care, one third of the nation is rural and significantly impoverished by comparison, and only has access to substandard care. Employers pay for nine percent of spending on private care, health insurance five to ten percent, and 82 percent is from personal funds. As a result, more than 40 percent of all patients admitted to hospital have to borrow money or sell assets to cover expenses, and 25 percent of farmers are driven below the poverty line by the costs of their medical care.

The market transition of healthcare companies is indicating quite significant development in emerging markets and growing economies. According to a recent report from Healthcare Medical Pharmaceutical Directory, the widening adoption of contemporary healthcare methods, with increased access to technology including new procedures, has allowed for significant medical progression. The introduction and expansion of a permanent healthcare provider presence beyond metropolitan zones and into rural areas has been extensive due to increased funding. There are now higher levels of clinician expertise, with a greater ability to manage more challenging patient healthcare issues, and the establishment of domestic healthcare industries that include product development and manufacturing, as well as producing quantities to export, has allowed for an increased flow of funds that can be re-invested into  nations.

As markets shift and the globe’s economies find themselves stimulating new and diverse ways of utilising resources, healthcare industries have found themselves well positioned to re-imagine their outlook. With that in mind, The New Economy has spent the past few months analysing the best firms in the field, thanks to reader feedback, and here announces the magazine’s 2012 Healthcare awards. Congratulations to all of our winners.

Connecting to the future

One of my favourite photographs shows a Hindu sadhu right out of central casting – naked body, long matted hair and beard, ash-smeared forehead, rudraksha-mala around his neck, the works – chatting away on a mobile phone. The contrast says so much about the land of paradoxes that is today’s India – a country that, as I wrote years ago, manages to live in several centuries at the same time. There is something particularly special about the sadhu and his mobile phone, because it is in communications that India’s transformation in recent years has been most dramatic.

When I left India in 1975 to go to the US for graduate studies, there were perhaps 600m Indians and just two million landline telephones. Having a telephone was a rare privilege: if you were not an important government official, a doctor, or a journalist, you might languish on a long waiting list and never receive a phone. Members of parliament had among their privileges the right to allocate 15 telephone connections to whomever they deemed worthy.

Moreover, a phone, if you had one, was not necessarily a blessing. I spent my high school years in Calcutta, and I remember that if you picked up your phone, there was not even a guarantee that you would get a dial tone; if you got a dial tone and dialled a number, there was no guarantee that you would reach the number you sought, and you usually heard an exasperated “wrong number!” more often than a friendly “hello.”

If you wanted to call another city, say, Delhi, you had to book a “trunk call,” and then sit by the telephone all day waiting for it to come through. Or you could pay eight times the going rate for a “lightning call” – but even lightning struck slowly in India in those days, so a lightning call took a half-hour instead of the usual three or four (or more) to be connected.

As late as 1984, when an MP rose to protest the frequent telephone breakdowns and the generally woeful performance by a public-sector monopoly, the then communications minister replied in a lordly manner. In a developing country, he declared, telephones are a luxury, not a right; the government had no obligation to provide better service; and any Indian who was not satisfied with his telephone service could return his phone since there was an eight-year waiting list for telephones.

Sign of the times
Now fast-forward to today. In the first edition of my book The Elephant, the Tiger and the Cellphone, I reported that, in April 2007, India set a new world record by selling seven million mobile phones that month, more telephone connections than any country had ever established in one month. By the time the book was printed, bound, and distributed to bookstores, that figure was already out of date. And in 2010, India sold 20m mobile phones three months in a row.

India has now overtaken the US as the world’s second-largest telephone market, with 857m SIM cards in circulation and an estimated 600m individual users. China has more, but India is ahead in phones per capita, is adding them faster, and is projected to overtake China before the end of 2012.

I am not merely celebrating a triumph for India’s capitalists. What is wonderful about the “mobile miracle” (I am not embarrassed to call it that) is that it has accomplished something that our socialist policies proclaimed but did little to achieve – it empowered the less fortunate. The beneficiaries are not just the affluent, but people who in the old days would not have dreamed even of joining the dreaded waiting lists.

It is a source of constant delight to me to find mobile phones in the hands of the unlikeliest of my fellow citizens: taxi drivers, paan wallahs (betel vendors), farmers, and fishermen. If one visits a friend in a Delhi suburb, one will notice on the side streets an istri wallah with a wooden cart that looks like it was designed in the sixteenth century, using a coal-fired steam iron that looks like it was invented in the eighteenth century, to press clothes from the neighbourhood. These days, however, he has a twenty-first-century instrument in his pocket; incoming calls in India are free under most calling plans, so it costs him nothing to find out where his services are needed.

Recently, I visited the country farm of a friend in Kerala. He asked if I wanted fresh coconut water; I said yes, and he pulled out his mobile and dialled the local toddy tapper.

A voice replied “I’m here;” we looked up, and there he was, on top of the nearest coconut tree, with his lungi tied up at his knees, a large hatchet in one hand and a mobile phone in the other.

Fishermen take phones out to sea to call the market towns on the coast on the way back to shore to see where they can get the best prices for their catch. Farmers used to have to send an able-bodied relative – perhaps a ten year-old boy – on a gruelling walk to town in the hot sun to find out whether the market was open, whether their harvest could be sold, and, if so, at what price. Now they save a half-day’s time with a two-minute call.

The mobile phone has empowered the Indian underclass in ways that 45 years of talk about socialism singularly failed to do. In the new India, communications has become the great leveller.

Shashi Tharoor is a member of India’s parliament, was Indian Minister of State for Foreign Affairs from 2009-2010, and served as the UN Under-Secretary-General from 2001-2007

(c) Project Syndicate 1996-2012