November 1, 2010
Volume XXXII, Issue 10
LimeWire Suspends File-Sharing Client Distribution
This week marked a notable development in LimeWire's ongoing legal case with the Recording Industry Association of America (RIAA).
According to publicly available court documents, an injunction was issued requiring LimeWire to disable "the searching, downloading, uploading, file trading and/or file distribution functionality, and/or all functionality" of LimeWire's file-sharing software.
Despite this setback, the company remains hopeful about future prospects and focused on the development of its new cloud-based music service. Its technological innovation, determination, and commitment have served LimeWire well in the past in overcoming hurdles that have also seemed daunting at the time.
Industry observers, while not surprised by this action, voiced concerns that its short-term result will be to disperse the large base of aggregated LimeWire file-sharing software users to alternative clients rather than supporting their migration to the new service that is being designed to monetize licensed music content in innovative and compelling ways.
When widely distributed file-sharing software programs have ceased commercial operation in the past, the impact on the overall volume of music tracks being redistributed by Internet users has generally been negligible. While relative market-share of such applications is obviously affected, the total amount of traffic is not reduced by such displacements.
LimeWire CEO George Searle said, "While this is not our ideal path, we're working with the music industry in moving forward."
From the standpoint of industry development, the more cohesively music rights holders can proceed in helping to expedite the conversion process of LimeWire to its new service, with as much of its file-sharing user base kept intact as possible, the better the short-term outcome will be in terms of optimizing the profitable response to the company's promising new offering.
The next key date in the legal process is January 17th, at which time another court session has been scheduled for the parties to take the next steps towards settlement.
Spotify Closes in on US Label Deals
Excerpted from CNET News Report by Greg Sandoval
The four major record labels are warming up to Spotify, the popular European P2P streaming music service trying to launch in the United States.
Spotify CEO Daniel Ek and his staff are closer than ever to licensing agreements with the labels and launching in the US.
Spotify is still without signed contracts to license music from any top label and there are still numerous points to be negotiated, but the company has never been closer to finalizing deals than now, said multiple sources with knowledge of the talks.
One of the ways that Spotify has stirred the labels is by offering big money advances, the sources said. The amount could not be verified. Spokespeople for Spotify and the labels either were not immediately available for comment or declined to comment.
Spotify managers have promised to launch in the US before the end of the year and up until the past week music executives were very skeptical about the company's chances of meeting that deadline. Spotfiy has already blown two prior launch deadlines.
Spotify's inability to reach licensing agreements with the labels can be traced to several factors. Some of the labels have lost faith in business models built on giving songs away to consumers free of charge. For some music execs, too many start-ups have attempted this and failed to continue licensing them. The list includes SpiralFrog, Ruckus, and Imeem.
There are also questions about Spotify's ability to turn users of the service's free offering into paying customers. In addition to the free service, Spotify charges for premium service. The rate the company converts free users into paying customers is in the single digits, insiders said. The labels want something closer to 15%.
There is little doubt among label honchos about Spotify's ability to attract a large following. The site's user experience has received glowing reviews, even from the likes of Facebook founder and CEO Mark Zuckerberg. But if the company fails at generating revenue from those users, there is a potential for Spotify to cut into sales from proven revenue producers, such as Apple and Amazon.
So, execs at the major record companies want enough upfront money to mitigate some of the risks they believe are involved in licensing Spotify. What has impressed some at the labels is the willingness of Spotify's leadership to pay the advances and bet on its own ability to create a winner in the United States.
Report from CEO Marty Lafferty
 Congratulations to Ned Sherman and the entire Digital Media Wire (DMW) team for their very well executed second annual Digital Media Conference West (DMCW) at the Hotel Kabuki in San Francisco, CA.
The Distributed Computing Industry Association (DCIA) was pleased to present the session entitled Content in the Cloud: What Does the Future Hold?.
We especially thank our panelists Vincent Hsieh, CEO, Aleric; Mick Bass, Vice President, Alliances, Ascent Media Group; Claude Tolbert, Vice President of Business Development, BitTorrent; Stephen White, Senior Vice President, Product and Content Management, Gracenote; and Richard Bullwinkle, Chief Evangelist, Rovi Corporation.
Vincent introduced Aleric as a cloud computing company offering software platforms with a solution-driven orientation, and briefly outlined the private vs. public cloud debate along with current security concerns centering mostly around public clouds.
One of the benefits of cloud delivery of popular entertainment content comes from the ability to help absorb sudden loads, such as those driven by peak demand for hit properties.
Cloud solutions help reduce overhead, and absorb certain operational burdens and reduce expenses in other ways as well. Internal use of clouds, for example, in post production and transcoding, can lower costs and improve productivity.
Right now, we're in a period marked by a lot of trial and error in the different shapes and forms of applying cloud computing to content distribution. One of the most promising areas is in filling gaps for what is not yet developed for digital distribution as opposed to being truly innovative with cloud-based solutions in this space.
For instance, transferring content among different co-owned devices to ensure access is a problem that cloud solutions can solve.
Mick explained Ascent Media's role as a digital supply chain services company, maintaining content, moving it around the globe, and helping rights holders to monetize it. As content distribution shifts to digital there is an increasing need for dealing with fragmentation and cloud-based solutions are of value here.
More and more content will be stored in cloud environments that will span multiple service providers along with increasingly targeted offerings to subsets of consumers based on areas of interest.
It is inevitable that entertainment content will migrate to cloud-based management and delivery solutions. The question is not so much "will it happen" as "when."
One area that still needs streamlining for the digital age is rights licensing. There needs to be simplification in order to move deals along. There needs to be an easy way for content rights holders to get to "yes."
Consumers have so many ways to interact with content as one of the manifestations of the migration to digital has been to create a very fragmented world. Along with this reality is the fact that companies can't afford to build a custom delivery situation every time there's a new device or niche delivery channel and have it work out economically.
A certain amount of standardization is necessary.
Claude started out by asserting that there is some way each audience member already interfaces with BitTorrent and can take greater advantage of BitTorrent tools. Each active user is part of BitTorrent's advanced cloud ecosystem, which supports a number of different business models, and consumers will determine which succeeds.
Companies are establishing formal business units to focus on digital strategies and this is a positive step.
In a way, the Internet already is a virtual jukebox, or vast repository of content that will continue to grow. The amount of P2P traffic and other IP content traffic will also continue to grow.
BitTorrent sees a lot of activity now among emerging artists as a growing part of content innovation, with these new players getting in front of consumers in new ways. There is a thriving live music scene around the world, for example, and this could be tapped with new cloud-based music services that we haven't seen yet.
Start-ups are also allowing people to create mash-ups, mix-ups, etc. and innovate in other ways.
Stephen described Gracenote as an entertainment and service provider. Part of its mission is to help service providers find better ways to interact with consumers in cloud environments. As content choices proliferate, it becomes more and more important to assist consumers in discovering and enjoying what they want.
In the music sector, licensing is easing, with reduced upfront costs and deal completion times, and there is some movement towards cloud-based services.
In motion pictures and TV, there is more active involvement in the actual creation of new services and a melding of cloud-based delivery with locally stored content. The first so-called "celestial jukebox" was actually built more than 10 years ago, but the question remains as to whether and when consumers will adopt it. The shift does seem to be coming.
Consumers are getting more comfortable with not having everything stored on their local hard drives. Providers are getting to the point that they can deal with the concept of "ubiquitous access."
At this point, nearly everyone in the media distribution space sees what is coming and now wants to try to control it. As a result, we tend to focus on the big gorillas, but we are in early stage of consumer adoption, and there is a long road to the maturation of these services to fill the needs of many subsets of consumers.
Start-ups working to focus on specific types of media and involved in "niche carving" will be successful, and there will be room for a lot more thanks in part to the efficiencies of cloud solutions.
Richard expanded on this noting that Rovi Corporation's focus is on helping consumers find and connect with content that is relevant to them. There is a positive shift taking place among content providers with new people using the company's services.
A key need going forward with cloud-based content services will be to create standards around metadata, which will significantly benefit delivery of content from both established and start-up content firms.
Big established players don't always win during periods of disruptive change, such as the movement to cloud-based entertainment content distribution. We can already see potential failures of some established players to port their strength into new categories, where logic would have said they should have succeeded.
Just because a powerhouse brand tries to move into this new arena of cloud-based delivery doesn't necessarily mean it will win. Helping with discovery of new content will be a key to success. And consumers still don't understand the cloud and want to download and own content, but this will change.
Richard also believes there is an unfulfilled opportunity for a live musical performance portal.
An audience question followed up on the transition period as people get accustomed to cloud-based access versus still building their content caches locally. There is still a prevalent hoarder mentality, although that may be peaking. Average consumer music libraries have grown from the hundreds to a few thousand to in some cases now tens of thousands.
Consumers want the kind of immediate access that has traditionally come from owning local copies of their music. The transition may be slower than some would like, but we can be very excited about some hybrid entertainment services coming this year, where you will have your local collection and augment it with cloud-based content. Share wisely and take care.
Online TV and Film Comprise Bulk of Network Traffic
Excerpted from Rapid TV News Report
The Fall 2010 Global Internet Phenomena Report from network policy control solutions provider Sandvine has revealed that within North America, real-time entertainment is the largest contributor to data consumption on both fixed and mobile access networks.
Specifically the survey shows that online TV and video, whether over-the-top (OTT) or Internet Protocol Television (IPTV), takes up 43% of peak period traffic on fixed networks and 41% of traffic on mobile access networks.
Sandvine pinpoints Netflix as a major source of content, representing more than 20% of downstream traffic during peak hours on fixed access networks, and is heaviest from 8 PM to 10 PM. Fixed access networks in North America deliver the highest prime time ratio (1.42) of any network examined in this report, indicating that subscribers are able to increase their usage during the evening without being constrained by the network.
Real-time entertainment has also grown to be the dominant application category in Asia-Pacific, particularly during the evening hours, and exerts significant influence on the upstream due to the success of the peercasting applications, PPStream and PPLive.
P2P-based file sharing remains a major component of traffic and exhibits remarkably consistent upstream levels throughout the day, accounting for 37% of all bytes carried.
In Latin America, networks are experiencing significant congestion during periods of peak usage. Even though file sharing is popular within the region, real-time entertainment is emerging as the dominant source of content, accounting for 27% of peak period traffic on fixed networks and 35% on mobile networks. The region also showed a shift in subscriber behavior towards favoring on-demand applications.
BitTorrent Dominates Global Internet Traffic
Excerpted from TorrentFreak Report
A new Internet traffic trends report released by the Canadian broadband management company Sandvine reveals that global P2P traffic is expanding, with BitTorrent as the key player. In North America, more than half of all upstream traffic (53.3%) on an average day can be attributed to P2P. The report further signals some interesting regional differences in P2P use, such as the dominance of Ares in Latin America.
Sandvine, the company that's best known for manufacturing the hardware that slowed down BitTorrent users on Comcast, has released its latest Internet traffic report. The company has looked into the traffic consumption of Internet users all around the world, and in this article we'll highlight some of the emerging trends in the P2P landscape.
The overall conclusion we draw from the data is that BitTorrent, and P2P traffic in general, is still dominant in all geographical regions. In North America, Latin America, and Asia-Pacific, P2P traffic is responsible for the vast majority of all upstream traffic. The percentage of downstream traffic is significantly lower, thanks to the streaming video sites that have gained popularity in the last years.
Despite the global nature of P2P, there are some striking differences in the preferred applications and protocols that are used. We'll discuss the various trends and statistics below, starting with North America.
BitTorrent remains the most used file-sharing protocol in North America, and the total amount of P2P traffic is still very significant. Sandvine's research reveals that on an average day, 53.3% of all upstream traffic can be attributed to P2P applications. P2P is less dominant on the downstream side. It is currently at 13.2%, following real time entertainment (45.7%) and web browsing (24.3%).
The bandwidth usage patterns during peak hours are slightly different, but still a massive 34.31% of all upstream traffic can be attributed to BitTorrent at these times. The BitTorrent percentage of downstream traffic lies at 8.39% during the busiest time of the day.
What's also noteworthy is that the Gnutella protocol (used by LimeWire, FrostWire, etc.) is still fairly large in North America. It currently accounts for 11.18% of upstream traffic and 2.12% of downstream traffic during peak hours. In most other parts of the world, Gnutella has vanished completely.
The normalized aggregate of all traffic (up/down) during peak hours puts P2P traffic at 19.2% during the first months of 2010. Interestingly, this is up from 15.1% in 2009, which shows that P2P traffic is growing strongly, not only in absolute numbers but also as a share of total Internet traffic in North America.
Overall, it can be concluded that P2P traffic is still on the rise in North America, with BitTorrent being the dominant protocol.
In common with North America, BitTorrent also remains the most used file-sharing protocol in Europe. The report doesn't give any exact stats, but roughly 40% of all upstream traffic and 10% of all downstream traffic can be attributed to P2P applications on an average day.
Bandwidth usage patterns during peak hours show that of 29.97% of the upstream traffic can be attributed to BitTorrent during these times, versus 8.29% of downstream traffic. PPLive, the popular P2P streaming video network, also has a significant share with 11.76% of all upstream traffic and 4.41% of downstream traffic during peak hours.
Strangely, Sandvine categorizes PPLive as real-time entertainment rather than P2P file-sharing.
In Europe, the normalized aggregate of all traffic (up/down) during peak hours puts P2P traffic at 11.0% during the first months of 2010. This is down from 22% in 2009, which indicates that P2P has lost half its share of the total Internet traffic there.
The relative downward trend of P2P traffic during peak hours does not mean that the absolute traffic has gone down. What is clear, however, is that relative to other traffic sources P2P has decreased in Europe, while it has increased in all other regions.
Latin America is the only region where BitTorrent is not the preferred protocol to share files. Even though BitTorrent has a decent market share there also, Ares is the most used file-sharing protocol. Overall, P2P traffic is huge in Latin America.
On an average day, 73.3% of all upstream traffic can be attributed to P2P applications. P2P is less dominant on the downstream side. It is currently at 23.1%, following real time entertainment (35.2%) and web browsing (28.3%).
The bandwidth usage patterns during peak hours of the day show that 11.91% of all upstream traffic can be attributed to BitTorrent at these times. This is dwarfed by the 54.74% Ares is credited for. The BitTorrent percentage of downstream traffic lies at 6.80% during the busiest time of the day, compared to 12.98% for Ares.
What is further noteworthy is that eDonkey is still fairly large in Latin America. It currently lies at 6.29% of upstream traffic and 1.82% of downstream traffic during peak hours. In most other parts of the world eDonkey has vanished completely.
The normalized aggregate of all traffic (up/down) at peak hours puts P2P traffic at 36.7% during the first months of 2010. Interestingly, this is up from 31.9% in 2009, which shows that P2P traffic is growing strongly, not only in absolute numbers but also as a share of total Internet traffic in Latin America.
We can conclude without a doubt that Latin America is the winner when it comes to the share P2P has of overall Internet traffic.
BitTorrent is the most used file-sharing protocol in Asia-Pacific, where P2P has a traditionally high market share. The report doesn't give any exact stats for this region, but roughly 60% of all upstream traffic and 25% of all downstream traffic on an average day can be attributed to P2P applications.
The bandwidth usage patterns during the peak hours show that 37.63% of the upstream traffic can be attributed to BitTorrent, versus 16.91% of downstream traffic.
PPLive and PPStream, two popular P2P streaming video networks, also have significant shares with 18.83% and 11.06% of all upstream traffic respectively, and 7.90% and 7.14% of downstream traffic during peak hours.
In Asia-Pacific, the normalized aggregate of all traffic (up/down) puts P2P traffic during peak hours at 25.7% in the first months of 2010. This is up from 8.4% in 2009, which indicates that P2P is still increasing its share of total Internet traffic there.
At the busiest time of the day BitTorrent has the largest market share of Internet traffic in Asia-Pacific compared to the other regions.
In conclusion, we can say that Sandvine reveals some intriguing statistics, with the overall conclusion that BitTorrent and P2P in general are going strong. Although there are regional differences, BitTorrent is responsible for a significant share of total Internet traffic in all regions.
Telefonica Plans to Offer Low-Cost Web Calls
Excerpted from Financial Times Report by Andrew Parker
Telefonica is going head-to-head with P2P telephony service Skype in the ultra-competitive international calling market through the Spanish telecom group's purchase of Jajah, a Silicon Valley-based Internet phone company.
This week O2, Telefonica's UK mobile phone business, is launching a low-cost international calls service for its customers. The service has been developed by Jajah, which Telefonica bought for $207 million in January.
Jajah's cheap international calls service was first launched at Telefonica's German mobile unit in July, and the Spanish group plans to introduce similar arrangements at five of its Latin American businesses next year.
Dialing people overseas was traditionally expensive, but Skype, the Internet phone company, has shaken up the fixed-line market over the past seven years by offering free or low-cost calls.
Calling card companies selling cheap international calls, notably to expatriates and immigrants, have also stolen market share from established fixed-line and mobile operators.
Skype and other companies using Voice over Internet Protocol (VoIP) technology are now starting to dent mobile operators' revenues derived from phone calls.
This is because the VoIP services moving to smart-phones enable calls to be made using the data portion of customers' handset tariffs.
Jajah also uses VoIP technology, but Trevor Healy, the company's chief executive, claimed its phone service offered higher quality calls compared with Skype's.
He said customers at Telefonica's German mobile unit were signing up to Jajah's low-cost international calls service at a rate of 800 a day. Mr. Healy described this as "amazing" given there had been no marketing campaign.
By focusing on Germany and the UK, Telefonica is launching Jajah's products initially in countries where it has limited fixed-line operations.
This in turn explains why Telefonica has a small share of the international calling market in these countries.
Most of the $280 million of revenue that Telefonica expects Jajah's products to generate for its operating subsidiaries in 2011 is likely to stem from low-cost international calls offered by its German and UK mobile businesses.
Wi-Fi Direct Allows P2P Connections without Hot-Spots
Excerpted from PhysOrg Report by Lin Edwards
The Wi-Fi Alliance has begun certifying laptop components incorporating the new Wi-Fi Direct technology, which provides P2P Wi-Fi connections among devices such as cameras and smart-phones without the need for a Wi-Fi access point or Wi-Fi network.
Chief Executive Officer (CEO) of the Wi-Fi Alliance, Edgar Figueroa, said the new technology was groundbreaking and would, for example, allow a salesperson making a sales presentation by using a smart phone or laptop to send slides or video to a projector without the need for wiring.
Another example is a camera taking pictures on the upper deck of a cruise ship, which could instantly upload picture data to a laptop on the deck below. The technology would also allow people to play a game in real-time on separate handheld devices, even in places with no Wi-Fi hotspot, such as on a train, Figueroa said.
Data is transferred at up to 250 Mbit/sec over a range of about 180 meters without the need for a Wi-Fi access point. In a pair of devices only one of them needs to have Wi-Fi Direct installed. P2P communication would be initiated by entering a personal identification number or pressing a button on the Wi-Fi Direct enabled device, and then the second device would present a screen requesting permission to connect to the first. The technology also includes power-saving features aimed at extending battery life.
Like other P2P networks, the security may be a concern for some, but Figueroa said the technology includes WPA2 authentication and encryption, that "security is baked into every connection," and security protection is automatic and does not need to be set up manually. The certification specification also focuses on corporate security. It allows companies to designate parts of the corporate wireless LAN to allow Wi-Fi Direct communication, or to block its use entirely.
The Wi-Fi Alliance has already certified five products (mostly laptop components) as Wi-Fi Direct ready. The products include an Intel Centrino internal PCI half mini card, Broadcom and Ralink PCI half mini cards, and Realtek and Atheros PCI mini cards. Wi-Fi Direct technology is expected to appear in the near future in many portable devices such as smart-phones, MP3 players, and cameras, and in devices such as television sets.
The Wi-Fi Alliance is a global non-profit trade association of over 350 companies. The Wi-Fi Certified program began in March 2000 to help ensure the quality and interoperability of Wi-Fi devices.
PeerApp Expands Partnerships and Adds 17 New Customers
PeerApp, a leading provider of Content Delivery Platforms and Transparent Internet Caching, announced the expansion of its partner network and significant growth in new customers. PeerApp gained 17 new customers during its most recent quarter ending September 30th.
This growth continues through both direct sales and partner programs as operators worldwide continue to leverage the UltraBand solution to improve subscriber Quality of Experience (QoE), increase network efficiency, and reduce international transit costs.
PeerApp is also announcing the continued expansion of its global reach with reseller and OEM relationships formalized with a variety of top-tier companies and integrators such as Alcatel- Lucent among several other industry leading companies.
"This is an exciting time for PeerApp," stated Robert Mayer, PeerApp CEO. "Operators are realizing the benefits of deploying a transparent Internet cache in their network to differentiate their service based on quality while taking advantage of bandwidth savings. While there are many content delivery solutions available to the market, most of them focus only on traditional "walled garden" content and do nothing to address the fundamental over-the-top traffic problems. Our partners understand that only PeerApp can address the bulk of rich media traffic in a converged platform. It allows our partners to complement their core solutions by leveraging PeerApp to differentiate their offering in the industry."
PeerApp's customer growth represents a continued worldwide expansion with new customers coming from Argentina, Armenia, Bolivia, Brazil, Colombia, the Dominican Republic, Honduras, Kuwait, Paraguay, and Thailand among others.
PeerApp's UltraBand solution enables network operators to increase their customers' QoE, optimize network performance, and reduce bandwidth operating expenses with the industry's most scalable content delivery platform. The solution allows the operator to support the growth of Internet video and take control of content delivery providing customers the best service quality.
Cloud Migration Made Easy
Excerpted from San Francisco Chronicle Report
The latest technology announced today by Racemi now makes it fast and easy to move server images and applications from on-premises data centers to cloud computing resources like Amazon EC2, GoGrid, Rackspace and Terremark.
Racemi's easy-to-integrate OEM automation technology migrates server images regardless of underlying operating system, application software, configuration, or even the physical, virtual, or cloud infrastructure.
The software uses image-based provisioning to enable the migration of server images between any machine type, physical or virtual, as well as on-premises and cloud computing implementations. It will even translate hypervisors to ensure that virtual machines work in the new cloud environment, such as converting VMware virtual machines to Hyper-V or Xen virtual machines.
"Racemi cloud migration software addresses the number one requirement from data center managers who are seeking to move workloads to clouds to reduce their cost and increase flexibility," said Lawrence Guillory, CEO, Racemi. "Our sophisticated automation software is the easiest path for OEMs wanting to add cloud capabilities to their offerings."
The software captures the entire "personality" of a physical or virtual server, including Windows, Linux and UNIX operating systems, applications and the storage and network configurations, in a single bootable image. This image has the ability to migrate to the cloud, while maintaining the personality and configurations of the original server.
Server images are created through live capture so downtime is avoided. Plus, the automation software automatically injects the correct drivers for the target cloud platform in the migration process.
Rachel Chalmers, Research Director, at The 451 Group wrote: "Racemi has come up with a strategy to match its image-provisioning expertise with the essential requirements of companies moving into the cloud."
Dan Olds, who heads the Gabriel Consulting Group, reported: "Script-based provisioning works fine until you try to use it to build clouds and automate the provisioning and re-provisioning of resource pools. Under these conditions, script-based provisioning doesn't provide the speed, scale, or sophistication necessary to handle the job. For these complex use cases, image-based provisioning is a much better answer."
Martin Hingley of the ITCandor industry analyst firm based in the UK reported: "I believe this enthusiastic small company has a vital role to play in server management and large organizational cloud computing."
Racemi has been named a Cool Vendor and has received other industry awards. The cloud migration software technology is immediately available for OEM partner evaluations.
Studios Adopt Digital Entertainment ID Registry
Excerpted from Digital Media Wire Report by Mark Hefflinger
A coalition of movie studios, pay-TV providers, and technology firms on Wednesday launched the Entertainment Identifier Registry (EIDR), a not-for-profit global registry that aims to develop a universal identifying code for movies, TV episodes, video clips, and other audio-visual content.
The coalition is led by industry standards groups MovieLabs and CableLabs, as well as Comcast and Rovi Corporation, and backed by members including Dexlue, Universal Pictures, Neustar, Paramount, Sonic Solutions, Sony Pictures, Disney, Warner Bros., Civolution, Vobile, INA, and the Motion Picture Association of America (MPAA).
The registry is intended to be "an industry resource to help streamline digital commerce and simplify consumer transactions."
These IDs within the registry will function similarly to UPC codes used to identify physical packaged goods, or the ISBN code system for books.
The registry is expected to become available to members in early 2011.
Chinese Telecom Equipment Giant Makes Push for US Market
Excerpted from NY Times Report by John Markoff & David Barboza
This spring, an executive from a Chinese telecommunications equipment company made an intriguing job offer to a Silicon Valley software engineer. The Chinese company, Huawei Technologies, wanted to get into the booming market for Internet-based computing, and it had just moved its United States research headquarters here to capture some of the best local talent.
The company, which is trying to expand its reach in the United States, has 17 research centers around the world, including one in Santa Clara, CA.
"How many engineers would you like for your team? Several hundred? That's not a problem," the recruiter said, according to the engineer.
When the software manager turned down the offer, the Chinese executive was undeterred and asked for the name of the engineer working under him.
The exchange underscores Huawei's bold entrance onto the world's technology stage. In the span of a decade, it has gone from imitating others' products to taking on international rivals with its own innovative computing and communications gear. But Huawei has largely been locked out of the United States - until now.
Sprint Nextel, the nation's third-largest wireless carrier, is preparing to make a decision on buying $3 billion in advanced wireless equipment, and Huawei is considered to be a front-runner for the deal.
Huawei is one of many Chinese companies that are pushing into more sophisticated and lucrative businesses. But security concerns make telecommunications a particularly delicate industry in this country, and even the hint of a Huawei deal with Sprint has generated worries in Washington.
Some in Congress and the national security establishment fear that Huawei's close ties to the Chinese military might allow China to tamper with American communications gear.
Last week, Senator Joseph I. Lieberman, independent of Connecticut, and three other members of Congress wrote a letter to Julius Genachowski, chairman of the Federal Communications Commission (FCC) , raising the specter that an equipment sale might permit the Chinese government to manipulate parts of the communications network, making it possible to disrupt or intercept phone calls and Internet messages.
Anticipating these hurdles, Huawei has hired a remarkable array of Washington lobbyists, lawyers, consultants and public relations firms to help it win business in the United States. It has also helped create Amerilink Telecom, an American distributor of Huawei products whose high-powered board includes former Representative Richard A. Gephardt, the former World Bank President James D. Wolfensohn and the one-time chief executive of Nortel Networks, William A. Owens.
Amerilink executives say they are primarily interested in helping Huawei overcome objections that its entry into the American market could jeopardize national security.
"We take the accusations very seriously," said Kevin Packingham, who recently left Sprint to become chief executive of Amerilink. "But regardless of the accusations, we have a model in place that ensures the security" of the network should Huawei win American contracts, he said.
The effort is beginning to pay off. This fall, the American Internet communications firm Clearwire will begin testing a system based on Huawei's 4G, or fourth-generation, network technology.
The Sprint contract would be Huawei's largest American deal by far. A Sprint spokesman, Scott Sloat, declined to discuss any potential deal. Sprint bought its last round of network equipment from Motorola, Nortel Networks and Lucent, now part of Alcatel-Lucent.
Huawei's American drive is significant because it is China's first truly home-grown multinational corporation. And some analysts say they believe its spectacular rise will serve as a model for other Chinese companies seeking to compete internationally.
Huawei is now the world's second-largest telecom equipment supplier behind Ericsson of Sweden, and with Chinese government backing, it has sewn up major deals in Asia, Africa, and Latin America. In Europe, Huawei has outmaneuvered Ericsson to supply equipment to big carriers.
Despite those successes, Huawei has struggled to break into the United States market, largely because of the security concerns and accusations of intellectual property theft and corporate espionage.
The company has repeatedly been linked to the People's Liberation Army of China. And over the last decade, Huawei has been sued in the United States by two of its major competitors, Cisco Systems and Motorola, over accusations that it stole software designs and infringed on patents.
Cisco settled its suit with Huawei soon after filing it. But in court documents filed in a lawsuit last summer, Motorola claimed that a group of Chinese-born Motorola engineers developed contacts with Huawei's founder and then, between about 2003 and 2007, conspired to steal technology from Motorola by way of a dummy corporation they had set up outside the company.
The national security issue has been bubbling up for some time. In a letter in August, a group of Republican senators wrote to the heads of four federal agencies asking questions about the risks of Huawei's entering a deal with Sprint, whose customers include the United States military and law enforcement agencies.
The Senators, who are seeking a stringent government review of Huawei, said they were troubled by the company's history, including evidence it had supplied communications equipment to Iran and Iraq during Saddam Hussein's regime, possibly in violation of United Nations sanctions.
"We are concerned," the Senators wrote, "that Huawei's position as a supplier of Sprint Nextel could create substantial risk for US corporations and possibly undermine US national security."
The reservations about Huawei extend to other countries. In Europe, some competitors are now complaining about so-called subsidies that Huawei receives from the Chinese government. And in India, there are worries that Huawei networks could pose security risks.
Huawei denies it has ties to the Chinese military and disputes accusations of intellectual property theft. Ross Gan, a company spokesman, says that Huawei is employee-owned and that it has grown by developing its own technology.
"We're an innovative company driven by the business needs of customers," he said. In a statement, the company added: "Huawei has never researched, developed, manufactured or sold technologies or products for military purposes in any country."
Industry analysts say Huawei, based in Shenzhen, has quickly matured into a fierce competitor in one of the most important and hotly contested technology arenas: sophisticated equipment that enhances the delivery of voice and video over the Internet and through wireless devices.
They say Huawei is gaining, in part, because of heavy spending on research and development. Chinese companies are generally weak in R.&D., but Huawei has 17 research centers around the world, including in Dallas, Moscow, and Bangalore, India, and most recently in Santa Clara.
Indeed, of the company's 96,000 employees, nearly half are engaged in research and development. In May, Huawei opened a stunning $340 million research center in Shanghai that it says will eventually house 8,000 engineers.
Huawei's rush to become multinational has not been entirely smooth. "It was a huge challenge for the company," said Geoff Arnold, a veteran Silicon Valley software designer who spent several years helping the company develop a cloud computing product.
"The bean counters in Shenzhen didn't have a clue about how to operate outside of China," Mr. Arnold said. "Huawei has great difficulty understanding what is happening outside of China and adapting their business practices."
Ren Zhengfei, a former soldier who worked for 10 years in China's Army Engineering Corps, founded Huawei as a reseller of telecommunications equipment in 1988.
Mr. Ren, now 66, rarely grants interviews. But according to a biography published in China, he insists on military-style efficiency and a "wolf spirit" mentality that encourages the sales force to relentlessly attack competitors.
In 2008, worries about national security and China's weak protection of intellectual property forced Huawei to drop its $2.2 billion joint bid with the American firm Bain Capital to acquire 3Com, the American networking company. Huawei also failed in other bids this year to acquire the wireless network division of Motorola as well as 2Wire, an American maker of broadband Internet software, according to people familiar with those deals.
Those bids collapsed, analysts say, because both Motorola and 2Wire were told that Washington was likely to block any deals.
Analysts note that Chinese companies have been willing to buy telecommunications equipment from American makers like Motorola, apparently setting aside any concerns about American espionage.
Peter J. Williamson, a professor of business at Cambridge University, said that while some continued to be bothered by Huawei's origins, its technological prowess was increasingly hard to ignore.
"The hardest market to crack is the US," he said. "But they've cracked Europe. And if they can work with Vodafone, one of the biggest carriers in the world, they can work with anyone."
Cloud Computing Storms In
Excerpted from Times Live Report by Shanthini Naidoo
By Wikipedia definition, cloud computing is Internet-based computing that provides, on demand, like an electricity grid, shared resources, software, and information to computers and other devices. It is all about storing information and applications in a virtual "cloud" managed by experts, rather than in a room in the basement, used by you and me, and managed by the IT guy.
The concept gained momentum recently but it is really about a decade old. In fact, ordinary people were the first to embrace the cloud, though we might not have known it.
Anyone who has used Facebook or Twitter, or has a Gmail or Hotmail account, or has ever Googled something, has used cloud computing.
Businesses and governments worldwide are now latching on to it. Internet Solutions MD Derek Wilcocks likens it to office workers no longer driving their cars to work daily, but instead using a highly efficient public shuttle service that picks them and their colleagues up at their door.
And why you should know about it is because it is going to change the way business - and the world - works.
"It means that companies are buying a service rather than hardware and software. Servers are getting bigger and more complicated. So, instead of having 30 servers for 30 companies, computing services providers will have one large server and maintain it," he said.
With the cloud, physical data centers still exist, but unless we are in technology companies, we will no longer have to deal with them or have them in our buildings.
"A big part of it is maintenance and pooling of skills. The advantage is that you can buy what you need and use your computer capacity better without unnecessary stuff. All you will need is a network link, a web browser and a very basic PC. No software, applications or security will be needed. We, the service providers, will take care of all of that.
"Cloud computing reduces costs because companies do not have to own as much infrastructure and can share technologies, paying for only what they need," Wilcocks said.
Last week, Microsoft launched a fully online, cloud-based test version of its popular Office suite in 13 countries.
That means that customers can get access to Office programs such as Outlook e-mail, and simplified versions of Word and Excel, without installing software, from virtually anywhere through an Internet browser.
The Deloitte technology report said: "We expect to see cloud computing grow fastest in the consumer, and small and medium enterprises markets, rather than in the large enterprise and government markets.
"Estimates vary but in 2009 cloud services revenue was about $55 billion and we predict that it will probably grow by more than 20% in 2010 to roughly $70 billion."
The growth of cloud computing means that sales of software in shrinkwrap will shrink.
The report said that cloud computing would, as most technologies do, develop first in countries with secure and reliable IT infrastructure.
This is mainly due to security worries. There is a vulnerability in world governments handing over highly sensitive data to an IT company to store virtually, or giving it access to data such as those stored on SARS's eFiling system.
At the Internetix communications conference in Johannesburg recently, Julius Segole, Senior Chairman of the Government Information Technology Officers Council, said, "The biggest issue holding us back when it comes to cloud computing is security."
Security is often an excuse for people who, for other reasons, are not ready to adopt a certain technology.
"Organizations will always need security, but because security is being built-in upfront, the cloud is often more secure. It is inherently more secure than previous solutions.
I tell people to start using it and they will be pleasantly surprised."
Joyent Expands Cloud Platform Capabilities
Excerpted from eWeek Report by Fahmida Rashid
Joyent unveiled new Windows and Linux cloud hosting capabilities that strengthen its line of products for building and hosting web applications, the cloud computing provider said this week.
Joyent's line of virtualized servers for businesses power large-scale websites and applications, reminiscent of Amazon EC2. The new Windows and Linux virtual machines will allow customers running high-volume, high-traffic Web applications on those operating systems to move into Joyent's cloud environment, said Adrian Ludwig, Vice President of Marketing at Joyent.
"We're seeing an increase in customers in the enterprise space who want to move onto the cloud, but face a formidable obstacle with an existing app built on a Windows or Linux OS," said David Young, Joyent's chief executive.
Despite wanting to move to high-scale and stable cloud environment, many businesses, when faced with the prospect of rewriting the legacy applications from scratch, were foregoing moving to Joyent's SmartMachines, said Ludwig. "They couldn't abandon the investment they'd already made in the legacy applications," he said.
Joyent's cloud environment is based on a customized operating system based on an optimized OpenSolaris kernel, Ludwig said. Because of the underlying OpenSolaris layer, many Windows applications, including the ones using proprietary technologies such as .NET and Windows Media, couldn't run on Joyent's SmartMachines platform.
With the newly enhanced platform, Joyent can now support a "seamless migration directly onto the Joyent cloud where they can leverage our exclusive smart computing infrastructure to gain reliable, peak performance at all times," said Young in a statement.
The SmartMachines platform is optimized for Web application development because of its customized SmartOS operating system, said Ludwig. The underlying layer improves CPU speed, reduces network latency and enhances disk and memory performance, while keeping costs low for customers, Ludwig said.
Ludwig said Amazon can't match the performance and stability of SmartMachines because EC2 is running on a "commoditized OS."
Ludwig cited an example of a company that performed real-time video transcoding in the cloud. While processes encoding Windows Media files had to run on Windows machines, other processes such as FTP, uploading or encoding other video formats, could run on other platforms, Ludwig said. The new Windows capabilities allowed the company to move from a Windows/Linux environment to a Windows/SmartOS environment, which reduced the number of machines required while increasing scalability, performance and stability, said Ludwig.
The virtual machines include the Enterprise and Standard editions of Windows Server, CentOS, Debian and Ubuntu operating systems. These systems are already rolled out to all its data centers and are available for customers.
Ludwig dismissed concerns that basing the SmartOS on OpenSolaris, which is no longer supported by Oracle after acquiring Sun, might pose problems for SmartMachine's future growth. A number of Sun engineers have left Oracle and joined Joyent, including Bryan Cantrill, one of the three developers behind Sun's DTrace technology, said Ludwig.
There is plenty of original Solaris talent in Joyent, according to Ludwig. Cantrill is responsible for overseeing worldwide development focused on operating systems, including building additional innovation into Joyent's SmartOS and SmartDataCenter.
DTrace is a feature of Solaris and OpenSolaris, which allows developers and administrators to probe the performance and behavior of the operating system as well as applications running in real time; a capability which enterprise users find especially useful.
Joyent provides the infrastructure which powers services such as professional social networking site LinkedIn and game developer Kebab. Joyent also offers a Facebook Developer program for developing and deploying Facebook applications.
Joyent also has Joyent Connector, a suite of collaboration tools for businesses, including e-mail, calendars, address books and file storage. Bingo disk is a Web-based storage service, providing users with up to 100GB of storage.
FrostWire Launches File-Sharing App in Android Market
Excerpted from EuroDroid Report
The multi-protocol file-sharing tool FrostWire has just launched its Android app on the Android Market, promising to bring the world of P2P content to your SD card via the Android Market.
It's been available on Android for some time via direct download, now it's up on the Market for the mainstream users. Here's the list of Android features, courtesy of FrostWire: search and download files on millions of devices; browse and download files from your closest peers; share files on social networks; explore, rename, and use your own files; P2P chat room; send private messages with attachments; control what you share; and auto-updates.
The Android app won't work via 3G due to high levels of bandwidth and data usage.
If you would like to try it for free, there's a direct download of the Android APK hosted on FrostWire's site here - whereas the Android Market version comes with a $4.99 price tag.
Pirate Party Considers Space-Based Web Hosting
Excerpted from Independent Political Report by Andy Greenberg
That, at least, is the vision of some members of Pirate Parties International (PPI). PPI serves as an umbrella organization for intellectual property (IP) reform-focused Pirate Parties around the world, which includes PiratPartiet, the Swedish Pirate Party with ties to the file-sharing site The Pirate Bay (TPB) and whistle-blower organization Wikileaks.
Last weekend, a group of Pirate Party members on the group's mailing list began discussing plans for a high-altitude balloon that would host a file-sharing site in the sky, ideally out of the legal reach of any authorities whose IP regulations could have it shut down.
Others, including Pirate Party Co-Chairman Gregory Engels, seem to prefer the idea of a Low-Earth-Orbit (LEO) satellite that would be harder to launch but easier to keep airborne than a slowly-deflating balloon. He points to a wiki already created in June by a German Pirate Party member to assemble ideas for that space-based web-hosting plan.
Some Claim Censorship Via COICA Is Okay
Excerpted from Techdirt Report by Mike Masnick
While the COICA bill introduced by Senators Patrick Leahy and Orin Hatch was initially designed to be rushed through Congress, after people pointed out that it pretty clearly violated due process and prohibitions against prior restraint, the Senators realized they needed to hold off for a bit.
Everyone has expected that it will be back on the agenda after the midterm elections, and now a bunch of companies and organizations, including the Recording Industry Association of America (RIAA) and the Chamber of Commerce have asked Leahy to move forward with the bill immediately following the elections. But most amusing of all is how they brush off the concerns about First Amendment violations and blatant censorship by the US government, at the same time as the US government is putting political pressure on countries that censor the web:
"Some foreign countries have engaged in political censorship long before this bill was introduced and they will continue to do so regardless of whether this legislation is enacted."
Say what? So it's okay for the US government to censor the web, because other countries censor as well? I recognize that their argument is that this won't change how other countries view censorship, but even that's wrong.
The US is pressuring other countries not to censor the web by claiming a moral high ground.
It seems particularly hypocritical to undermine that moral high ground by blatantly censoring the web as well, and then saying "but it's okay for us, because it's about protecting these companies."
That just makes it easy for those other countries to respond, "Well, then it's okay for us, because it's about protecting our government / way of life / etc."
Coming Events of Interest
Streaming Media West - November 2nd-3rd in Los Angeles, CA. The number-one place to come see, learn, and discuss what is taking place with all forms of online video business models and technology. Content owners, viral video creators, online marketers, enterprise corporations, broadcast professionals, ad agencies, educators, and others all come to Streaming Media West.
Fifth International Conference on P2P, Parallel, Grid, Cloud, and Internet Computing - November 4th-6th in Fukuoka, Japan. The aim of this conference is to present innovative research results, methods and development techniques from both theoretical and practical perspectives related to P2P, grid, cloud and Internet computing. A number of workshops will take place.
International CES - January 6th-9th in Las Vegas, NV. With more than four decades of success, the International CES reaches across global markets, connects the industry, and enables consumer electronics (CE) innovations to grow and thrive. The International CES is the world's largest consumer technology tradeshow featuring 2,700 exhibitors.
CONTENT IN THE CLOUD - January 7th in Las Vegas, NV. The DCIA's Conference within CES explores this cutting-edge technology that promises to revolutionize entertainment delivery. Six keynotes and three panel discussions focus on cloud-delivered content and its impact on consumers, the media, telecom industries, and consumer electronics (CE) manufacturers.
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