« February 2006 |
Main
| April 2006 »
March 26, 2006
Generation M
Fascinating research piece which I located courtesy of Confused of Calcutta.
Kaiser Foundation report - Generation M, age 8 - 18
March 26, 2006 at 04:16 PM in Consumer trends | Permalink | TrackBack (30) | Top of page | Blog Home
March 24, 2006
The blog in the corporate machine
Corporate reputations | The blog in the corporate machine | Economist.com
Feb 9th 2006 | CHICAGO
From The Economist print edition
Bloggers can be vicious, but they can also help companies avert disaster
THEY have always had their critics, but corporations are having an especially hard time making friends of late. Scandals at Enron and WorldCom destroyed thousands of employees' livelihoods, raised hackles about bosses' pay and cast doubt on the reliability of companies' accounts; labour groups and environmental activists are finding new ways to co-ordinate their attacks on business; and big companies such as McDonald's and Wal-Mart have found themselves the targets of scathing films. But those are just the enemies that companies can see. Even more troubling for many managers is dealing with their critics online—because, in the ether, they have little idea who the attackers are.
The spread of “social media” across the internet—such as online discussion groups, e-mailing lists and blogs—has brought forth a new breed of brand assassin, who can materialise from nowhere and savage a firm's reputation. Often the assault is warranted; sometimes it is not. But accuracy is not necessarily the issue. One of the main reasons that executives find bloggers so very challenging is because, unlike other “stakeholders”, they rarely belong to well-organised groups. That makes them harder to identify, appease and control.
When a company is dealing directly with a labour union or an environmental outfit, its top brass often take the easy route, by co-opting the leaders or paying some sort of Danegeld. Until a couple of decades ago, that meant doling out generous union contracts and sticking shareholders, taxpayers or consumers with the bill. More recently, the fashion has been for “corporate social responsibility”. This might involve spending money on a pressure group's pet project; or recruiting prominent activists to a joint committee, dedicated to doing good works.
In the blogosphere, however, a corporation's next big critic could be anyone. He might be an angry customer or a disgruntled employee—though that sort of tie to the company is not essential; nor does he need lots of industry experience or lengthy credentials to be a threat. All a blogger really needs to devastate a company is a bit of information and plausibility, a complaint that catches the imagination and a knack for making others care about his gripe.
Mike Kaltschnee's site, HackingNetflix.com, became a force to be reckoned with for Netflix, a video-rental outfit that delivers to people's homes. When Netflix said it was not interested in Mr Kaltschnee passing on questions from consumers, he posted the exchange online, hurting the firm's reputation among loyal customers. The company now treats him much more respectfully and his site has gained a large following.
Increasingly, companies are learning that the best defence against these attacks is to take blogs seriously and fix rapidly whatever problems they turn up.
One firm that could have saved itself a lot of trouble is Diebold, an Ohio-based firm that makes automated cash machines. After America's presidential election in 2000, which featured a vote-counting fiasco in Florida, the firm decided to expand a part of its business that made electronic voting machines by acquiring Global Election Systems (GES) in early 2002. The deal turned into a disaster when computer scientists and voting-rights groups educated the public about problems with machines such as those made by GES. The critics complained that GES's voting devices could not leave an audit trail because, among other flaws, they did not print paper ballots. By 2004 the mainstream print and broadcast media were also hammering away on this issue, leading several states, including Ohio, to reject GES's machines.
Evolve24, a consultancy which analyses corporate reputations and watches online trends closely, has used its blog-sniffing software to find out what was available on the internet before Diebold bought GES. It discovered that not only were a couple of voting-rights activists calling attention to the machines' drawbacks on their blogs well before the acquisition, but also that research papers highlighting the problems were available on technical websites. Diebold did traditional forms of due diligence before buying GES, such as verifying its financial health. But by ignoring the blogosphere, it failed to spot some crucial risks.
Although its response was much quicker than Diebold's, Kryptonite, a firm that makes high-priced bicycle locks, also learned the hard way how important blogs can be. In September 2004 word spread quickly through the blogosphere that U-shaped locks by Kryptonite and other firms could be picked, quickly and easily, using only the plastic casing of a Bic pen. Then somebody made a video showing how to do it, and posted it on the Engadget blog site, one of the most popular on the internet. After Kryptonite discovered the problem, it came up with a plan to take care of its customers and improve its locks. But Donna Tocci, Kryptonite's media chief, says that she now checks 30-40 blogs every day.
Not all company interactions with bloggers involve damaging criticism. Sometimes a careful look at what is happening online can help managers to avoid over-reacting. After the invasion of Iraq, when American consumers turned against all things French, a big French drinks company noticed that its brand names were popping up on boycott lists. But an analysis by BuzzMetrics, which specialises in scrutinising blogs and other online forums for corporate marketers, revealed that those who were pushing hard for a boycott tended to be “Budweiser drinkers”, who would not have been natural customers for the firm's wines and spirits anyway.
A hair of the blog
Many big companies have been looking eagerly for ways to tailor their advertising to specific groups of consumers. They have found that web logs and internet discussion groups, which bring together people of similar interests, can help them turn hot links into cold cash. But besides trying to get out their message, companies are also learning that blogs can provide early warning signs of potential problems.
They are increasingly turning to firms that can help them sort through the blogorrhea to find what they need. There is a lot to sift, considering that some 27m blogs are online. Last month, responding to growing interest in their services, BuzzMetrics agreed to merge with Intelliseek, another firm that specialises in analysing blogs for business. BuzzMetrics has ties to Nielsen, a media-research firm; Intelliseek has a clutch of former executives from Procter & Gamble, a consumer-goods giant.
Max Kalehoff, vice-president of marketing at BuzzMetrics, says that many of the firm's clients want it to analyse blogs so as to gauge the seriousness of bad news. Drugs firms, for example, want to know what questions are on patients' minds when they hear about problems with a medication. Car companies are looking for better ways to spot defects and work out what to do about them.
Steve Rubel, of CooperKatz, a public-relations firm, reckons that companies should also have a ready-made plan for influencing bloggers if a crisis does occur. Mr Rubel runs the firm's Micro Persuasion practice, which helps companies improve their marketing by using blogs and other conversational media. He recommends setting up a “lockbox blog” that is hidden behind an internet firewall, but can be made visible to the public at short notice. Any websites or video clips that companies might want to direct the public to in an emergency, for example, could be prepared in advance. Then, he likes to tell clients: “in case of emergency, break glass and blog.”
March 24, 2006 at 10:53 PM in Blogging & feeds | Permalink | TrackBack (395) | Top of page | Blog Home
Think Web 2.0 and think Microsoft? Not necessarily - Gates Interview Mar 24th 2006
Q&A: Microsoft chairman Bill Gates: Builder AU: Architect: At Work
The company has long provided the tools for building websites. But it's been a couple of steps behind when it comes to some of the bigger ideas and business models that have surfaced around web 2.0, such as advertising-based software.
In addition, Microsoft has long made devices - whether it's the PC, server or handheld - the centre of computing design. Now websites are becoming programmable, allowing people to "mash up" data from different sites.
To try to capture - and participate - in some of the buzz around web 2.0, Microsoft organised a conference in Las Vegas called Mix '06 aimed at web developers and designers. After his keynote speech at the conference on Monday, Microsoft chairman and chief software architect Bill Gates spoke to Builder AU sister site CNET News.com's Martin LaMonica about the push into hosted services, competition with Google and mobile computing.
Builder AU: A lot of the buzz and thinking around web 2.0 has come from outside Microsoft. Is this conference an attempt to get more involved there? And does that concern you at all?
Gates: Well, for the key new technologies that enable us to take the browser to a new level - DHTML, JavaScript, XML capabilities - we've been the pioneer.
If I'm a consumer or small-business owner, I could get a lot of applications in a hosted version, from project management to word processing. In that world of web applications, how do you make Windows Vista a must-have?
Well, Vista is probably more relevant now than ever because, as you're browsing, you want to download Active X controls and have a security framework in there. Having the kind of "reputation" services we built into Vista makes the community value more important: we know which websites are phishing websites. We know which controls people have had a good experience with. That kind of reputational value may be one of the biggest things people get out of Vista.
Likewise, the ability to download code and compartmentalise it - that's kind of a breakthrough that's come out of the fact that we're down the learning curve on security - way more than any other company - I can say 100 times as much. In the last three years, it's been our biggest R&D priority, and we've made breakthroughs.
Vista, in terms of rich media - people are doing movies more. People want to organise and find those things. They want to work offline as well as online. We picked the things where people want Windows to [work] better.
People are designing applications with the web in mind. In the past, you've been more Windows-centric with development tools. Will you be pointing developers to write applications where the web is the development platform?
The web is where a lot of code is being written, and you can go back to the year 2000 and the .NET initiative. .NET was designed to let people do state-of-the-art websites. In fact, .NET's success has been the primary platform for building websites. It's been quite phenomenal.
People are using other tools - around scripting, PHP and all that. But we've come in and really targeted that market. And as people do richer websites, we think the richness of what we've done there will go beyond the scripting-language-type approaches, which are fine. But more and more people will do sophisticated things. So there's nothing dramatic here, in the sense that the web just happened.
The web is evolving. There's a little bit more maturity now, in terms of business models with advertising coming in, with some of the late-90s' mistakes understood. But we're probably, as an industry, making some of those same mistakes. And that's OK. The ferment, the creativity, is incredible to see.
You've been talking about the web as a development platform for years. Internally at Microsoft, have you made the switch?
[Microsoft's] first company meeting around software as a service goes back over seven years now. We said it's a lot better for us and customers. Instead of viewing software as a one-time thing - you buy a new version, you're using that - if we have a continuous relationship [with] something like Watson, where we monitor what people are doing and the drivers they are using, Office Online can get templates and download new things.
It's letting our software innovation be more connected to the user, more customised to what they want. It's a great paradigm for us - to create new value. We did underestimate advertising, so an element of what we're doing there is catch-up.
There was a major demarcation when Ray [Ozzie] put out his memo last year, really saying the primary applications model will have everyone delivering through the web, monitored through the web, updating through the web. And many of these services, like storage or authentication, that you think of as Active Directory or SharePoint on premise - we've got to get those out [so people can] simply connect up to them. We're making great progress on that.
That's what makes this industry fun. Even Microsoft, with incredible research capabilities - the marketplace will come along and show us to put more into this and what is not paying off. We've got to be very dynamic. So far, throughout our history, our epitaph has been written 10 times, and so far, we're still alive. It's fun to see we're going through another one of those cycles.
And particularly, people think Google was born on this [web application] paradigm, and [are wondering whether] any of the traditional software companies understand and can actually push this paradigm. Here at this conference, clearly, we're saying we've got the best tools for this paradigm, and we want to know where we should take it.
Last week, you said you're going after IBM. As you look at the next generation of applications across the board, who do you think is your primary competitor? Is it IBM and its platform, or is it Google and its web platform?
When it comes to supplying enterprises and having that long-term relationship, we and IBM are hotly competitive in doing that.
In terms of thought leadership, if someone said who's cool right now, obviously, Google would be high on the list there. Really, one thing they've done that's been key to their success [is search]. We have to provide a better search experience - and get people to think about search in terms of these tasks, these contexts. We think we have a lot to contribute there. Not many people are brave enough to compete with something with that kind of scale and momentum. Well, we are.
Google bought a little company that does an online word processor, and there's talk of it doing an online calendar. Do you think it could assemble a web "office" and compete with what you have?
I think they can do anything they want. Remember Orkut? That was a great social-networking thing that I don't think has been heard of for the last few years. They came out with an instant-messaging voice-type product.
Certainly, there will be lots of ways that people offer software over the internet. There will be so many companies doing these things. It's not really appropriate to look at just one.
Not many people are brave enough to compete with [Google], with that kind of scale and momentum. Well, we are.
The idea that there will be complementary capability, where using rich-client capability and web capability - that's a big theme from us. You can look through our history. We've been pretty rational as the fads roll through. Yes, there's a lot to be said for that, but that doesn't take away from the fact that you want - when not connected to the internet - access to your information. You want richness and responsiveness that local applications can provide.
There's a lot of experimentation with business models. Are you concerned that some of the business models are not quite baked?
Well, I think we'll see the same types of things we always see, with lots of new companies and new ideas. Ninety per cent will not be distinct enough or not have the right business model, and those will go away. And yet the 10 per cent that emerge will show new and neat things. Take all the companies doing video today. If you asked me today which ones will be here five years from now, I couldn't really say and yet - I love using them. I think what [they've] got there is neat and exciting.
I do think some of the bigger players, like ourselves, Yahoo! and Google, will be in that space, offering those capabilities as well. But there's room for some great success story to come out of it. I think it's a bit unclear, though, now how far it can go.
What problems do you want Ray Ozzie thinking about, as one of your chief technical officers?
He's a phenomenal person, in terms that he thinks like a developer and thinks like an end user. He'll sit down and literally do story boards - if I want to do this scenario, how can I do very few screens to get to that?
Everything he's done in his career has been a leading-edge thing. He, more than anyone, is thinking: what is a "Live" application? How is it different from a classical application and, therefore, what services should Microsoft provide? He's gathered a top group of Microsoft people, and he's driving that idea of how to design a platform. But because he's Ray, he's keeping in mind those end-user things.
We wanted to hire Ray for decades - literally. But the timeliness of his coming in and knowing he's shaped his mind around what these new applications look like is phenomenal for us. Having someone full-time thinking about that evolution is very, very important.
From a business point of view, what do you think is the bigger opportunity? Is it selling the servers and tools, or is it the advertising?
Well, advertising - nobody really knows what the limits to that are. There will be experimentation to having you watch ads while you're doing anything on the computer, because people will see if they can't make money that way.
I think the thing that will jump out over time - when you're in the context of buying, when you want to organise a trip, an event, pick a gift - will be tools far beyond search that help with that.
There is debate that just doesn't go away, between the web services protocol stack called WS Start and the simpler approach of XML over HTTP. Do you think that you over-engineered web services?
I feel super good that we did the hard work [with web services] and made that an industry standard for rich interoperability. The lead times for that - figuring what standards body to put them in, the testing with IBM products and all those things - that is the one we really needed to put the energy into. Now we can circle back and say, "OK, let's make sure that the tools for all that spectrum are very strong."
When do you think ultramobile devices will become mainstream devices - and even a PC replacement?
Well, it is a PC, and for a lot of people, it will be their second PC. And I'm a total believer in the tablet - I think it will be totally mainstream. Whatever it takes, Microsoft will be behind it to make it better and better. If I'm critical of us, I'd say that making it easy to have multiple PCs [and having] your "state" just show up on those PCs - that's been partly holding people back.
The Origami - you want to take it to meetings with you but you don't want to think about syncing before you walk out to that meeting. [The information] should just be there.
You were critical of the $100 laptop idea for developing countries that's come out of the MIT Media Lab. Can you tell us what alternative approaches you're pursuing?
Anybody that is doing low-cost PCs - that's great. We love low-cost PCs. I do think you do need to think about the cell phone. We're doing some things to let it display on a TV-type screen. Because it's got a network, because it's got a business model, that will often be your first PC [equivalent, in a developing country].
Or [there could be] a shared PC where you go to a community centre and you want a large screen and multiple people can stand around it. The PC industry is very, very competitive, so all the varieties [are] going to get tried. I think countries should let their marketplace figure out where's the training, where are the communications networks, where's the content.
It's a very complex thing that probably doesn't lend itself to a top-down approach but everything that drives computing out to more people we are very, very enthusiastic about.
But you seem to prefer a mobile phone attached to a TV?
No, I don't prefer any - to be clear, I think there's going to be a variety of form factors that relate to the different environments. After all, the communications cost is really the hardest thing here. We have PCs down at $200 - and that's fine. Some of those even have a battery in them. So you don't miss out there - where you miss out is the broadband connection, the curriculum, the support - all the elements that can make it relevant.
Because, after all, we don't just want PCs out there. We want them out there connected and used and relevant so that they lead to more economic success. Certainly, between Microsoft and the [Bill and Melinda Gates] Foundation, I spend a lot of time in developing countries, looking at the realities. It's very complex to make sure you get all those pieces lined up.
March 24, 2006 at 10:42 PM in Microsoft | Permalink | TrackBack (9) | Top of page | Blog Home
US telecom execs battle Net neutrality demands
US telecom execs battle Net neutrality demands - Yahoo! News
By Jeremy Pelofsky and Robert MacMillan Fri Mar 24, 2:40 PM ET
LAS VEGAS (Reuters) - Telecommunications providers like AT&T Inc. intensified their efforts this week to persuade US policymakers to avoid imposing regulations on the Internet for services like streaming movies and unfettered Web access.
The "network neutrality" battle in Washington pits high-speed Internet operators against content and application providers. Network owners want to sell tiers of service to reflect bandwidth usage, while the content companies fear they will be shunted to the slow lane of the Internet or shut out unless they pay more for dedicated network service.
The issue dominated the annual convention of big and small carriers held by the US Telecom Association (USTA), as they stepped up efforts to influence lawmakers and regulators who are mulling whether new rules or laws are necessary.
AT&T, BellSouth Corp. and Verizon Communications executives spent the week criticizing demands for network neutrality laws at almost every opportunity.
"This debate I think is all about movies," said Jim Cicconi, AT&T's senior executive vice president for legislative affairs. "What we're saying is that you can't provide dedicated line, virtual private network services for free."
AT&T, BellSouth and Verizon say they do not intend to block Internet content and prefer to make commercial bandwidth deals with content companies such as Internet retailer Amazon.com or Web search engine Google Inc.
USTA Chief Executive Walter McCormick pressed the matter with
Federal Communications Commission officials who attended.
"We're hearing a lot today about Net neutrality, it's in the newspapers just about every day," McCormick told FCC Chairman Kevin Martin during a public event. "The chairman of Disney said this is not an area to legislate in."
Martin replied that the agency has previously acted against discrimination, but recognized the need for network operators to control service and ensure "they have opportunities to offer differentiated products."
But Internet phone service company Vonage Holdings Corp. and others like Amazon.com worry their Internet applications could be blocked unless they pay for dedicated service.
"We're not looking for a free ride, but that downstream injection of content be offered on reasonable and non-discriminatory terms," said Paul Misener, vice president for global public policy at Amazon.com.
In Hollywood, streaming of full-length movies and television shows via the Internet has been slow in coming. Content delivery from Web sites like Movielink and CinemaNow has for the most part been confined to downloads.
But increasingly television networks and movie studios want to use the Web to reach consumers directly.
"If America is to enjoy the ever-expanding Internet, providers have to be able to manage their networks according to the needs of customers," said BellSouth Chief Executive Duane Ackerman. "But let me be clear, managing the networks is not about controlling where people go on the Internet."
Some consumer groups questioned whether the carriers would give their own services priority over competitors.
"My concern is they would say 'well you know we only have enough bandwidth to provide that quality of service for our service'," said Gigi Sohn, president of Public Knowledge.
The FCC last year attached network neutrality conditions to Verizon's acquisition of MCI and the deal that formed AT&T. It required them to provide consumers unfettered Internet access and to run any Internet-based applications for two years.
Lawmakers are considering etching those principles into law and giving the FCC enforcement power. But, some in Congress and at the FCC question if there is a problem to be solved.
"There is a big difference between a very important issue that needs discussion and a problem," Republican FCC Commissioner Deborah Taylor Tate said.
One of the two Democrats on the FCC, Jonathan Adelstein, said network neutrality could be resolved with more bandwidth.
"You don't need to worry about priority access if you've got 100 megabits going to the home," he said. "Hopefully as we get more capacity those kinds of questions become much less significant."
(Additional reporting by Bob Tourtellotte in Los Angeles.)
March 24, 2006 at 09:04 PM in Internet evolution | Permalink | TrackBack (40) | Top of page | Blog Home
March 23, 2006
60% Of Windows Vista Code To Be Rewritten (plus Johnson PSD memo)
David Richards - Friday, 24 March 2006
Up to 60% of the code in the new consumer version of Microsoft new Vista operating system is set to be rewritten as the Company "scrambles" to fix internal problems a Microsoft insider has confirmed to SHN.
Advertisement
In an effort to meet a dealine of the 2007 CES show in Las Vegas Microsoft has pulled programmers from the highly succesful Xbox team to help resolve many problems associated with entertainment and media centre functionality inside the OS. The team are also working closely with engineers from the Intel Viiv team. and it is now expected that the next version of Viiv could be delayed to line up with the launch of the consumer version of Vista at the 2007 CES Show in Las Vegas.
One of the key components of the consumer version of Vista is the Media Centre code. This will be an optional package in the same way that Microsoft currently sell a Professional and Home version of XP. With Vista there will not be a seperate Media Centre SKU.
One of the key components of the consumer version of Vista is the Media Centre code. This will be an optional package in the same way that Microsoft currently sell a Professional and Home version of XP. With Vista there will not be a seperate Media Centre SKU.
Microsoft has also admitted that it has major problems in it's Windows division and has has immediatly initiated a total restructure of the division, a move that comes after a costly delay in rolling out its Vista program.
The company has said that it is restructuring its Platforms & Services Division and 'enhancing' the leadership team. At the heart of the changes is the elevation of Steven Sinofsky to senior vice president of the Windows and Windows Live Group. 'Steven`s leadership, management and technical skills are well documented and evident in the kinds of products he ships and the type of work environment he creates,' said Ray Ozzie, Microsoft`s chief technology officer.
'I`m looking forward to working with Steven and his team in delivering software-based services that extend the value of our offerings by providing a more seamless connection between our desktop products and the Web.' Analysts estimate that Microsoft`s delays in releasing the next generation of its operating system, known as Vista, have cost it about $500 million.
An internal memo written by Kevin Johnson the Co-President of the Windows division has revealed the changes that the Windows division faces. The text of the memo follows:
"Aligning PSD for Growth and Agility."
From: Kevin Johnson
Sent: Thursday, March 23, 2006 10:01 AM
To: Platforms & Services Division
Cc: Executive Staff
Subject: Aligning PSD for Growth and Agility
Since taking on my new role last September, I've spent quite a bit of time focused on how best to position the Platforms and Services Division (PSD) for the future. I want to share with you some of that thinking and some new changes we are undertaking today.
We continue to see a strong wave of innovation from Microsoft making its way to market. PSD is a big part of this wave. The recent launches from our Server and Tools business, including SQL Server 2005, Visual Studio 2005, BizTalk 2006 and Windows Server R2, have been well received by customers and partners, and the team is now focused on Longhorn Server. The Windows client team continues to drive forward on Windows Vista with the latest CTP that was released in February. The MSN division continues to deliver new innovation such as Live Mail, Live Messenger, our constantly improving search offerings and many other Windows Live offerings. MSN itself has enabled new channels and content and continues to expand. All of these product and service releases are evidence of a strong wave of innovation and momentum in the market.
Over the last few months, I've made it a priority to listen to what's on people's minds. I have had the opportunity to conduct more than one hundred 1:1's and have met with over 2,000 of you at all-hands meetings and roundtables. Not surprisingly some common themes have emerged. Your questions, concerns and feedback, taken together with the dialogue within our leadership team pointed to the need to address three key questions for our division:
What are the next steps for advancing our vision of software + services?
Are there growth opportunities upon which we should be more focused? How can we be more agile?
As our current product pipeline hits the market, it's a good time to lay the foundation for the future of PSD. I have been working with Jim Allchin and other PSD leaders to establish an organization that positions us for the future. This has been a very collaborative process and we have considered many options. The PSD organization changes we are announcing today are driven by the following objectives which are rooted in the input I've received from so many of you:
1. Software + Services: Position for the next wave of innovation relative to our vision for Windows Live. Ray Ozzie and I continue to work closely to advance the Live vision announced last November. End-to-end scenarios that enable seamless experiences across client, server, and services are critical for all customers, and Windows Vista + Windows Live begins to address this vision. Utilizing services as a distribution vehicle for user experiences enables us to embrace the concept of software + service and deliver innovation to market faster. Doing this requires us to think about the Windows Live platform as a key to the value proposition we deliver to developers. These changes provide clear connections with Ray and his team to help shape the Live platform, Live experiences and the marketing that supports Windows Live.
2. Growth: Focus on the key growth opportunities ahead of us, specifically online advertising, emerging markets, and enterprise computing infrastructure. Our Server & Tools business has shown strong growth over the last few years, and has great opportunities to continue that momentum. Windows Client has growth opportunities in premium offerings, new solutions for emerging markets, and in reducing unlicensed PCs. Certainly the upcoming launch of Windows Vista will spark a new wave of growth across our broader industry and partner ecosystem. Analysts predict the online advertising industry will grow to $35B+ by 2008 which creates opportunity for our MSN and Windows Live businesses.
3. Agility: Lay the foundation for accelerating our pace of innovation, including focusing on ways to improve clarity of decision making, drive greater accountability, and reduce layers in the organization so we can move faster. It also means utilizing existing expertise within the division to embrace services -- and rapid release cycles that services can enable -- to all aspects of our business. Our software + service approach and the expertise we have built in MSN can support innovation agility as we enable the Live era.
As part of the next step of Jim's transition, we discussed when it was appropriate to move his direct reports to me, and decided that this organization change was the right time. Jim's overall partnership role with me in running PSD will not be changing.
The PSD leadership team I've put in place to align against these key objectives includes:
Steven Sinofsky, SVP Engineering, Windows and Windows Live Group
Brian Valentine, SVP COSD
Blake Irving, CVP, Windows Live Platform Group
David Cole, SVP, Online Business Group
Yusuf Mehdi, SVP, Chief Advertising Strategist
Mike Sievert, CVP Windows Client Marketing
Will Poole, SVP Market Expansion Group
Bob Muglia, SVP Server and Tools Business Group
Sanjay Parthasarathy, CVP Developer and Platform Evangelism
Brent Callinicos, CFO and CVP Finance Group
Rick Thompson, CVP supporting a special assignment
Darryn Dieken, Technical Assistant
Brian "Skip" Schipper, GM Human Resources
Mary Snapp, CVP and Deputy General Counsel, Legal and Corporate Affairs
I know change is never easy but I truly appreciate the focus that people throughout PSD have on innovation and the wave of products and services our team is delivering to the marketplace is impressive. These changes are intended to help us increase our agility, embrace the concept of software + services, and position us for an exciting future together.
Let's continue to impress customers and partners with our innovation, and drive satisfaction to levels we've never achieved before. Let's also stay focused on our priorities as we make this transition and align our organization for the future.
For those of you who will be on campus in Redmond on Friday, March 24, I hope you can join me in person, in B33/McKinley Room, from 10:00 - 11:00am. The meeting will start promptly at 10:00 a.m., so please plan on arriving a few minutes early to ensure you get a seat.
I hope everyone else will watch the webcast, which will be streamed live on the intranet and archived there for later viewing. Whether you attend in person or via the Net, you can submit your questions to execqa@microsoft.com before the meeting begins. Thank you for your contribution and your continued focus on innovation and our customers.
Kevin
March 23, 2006 at 07:24 PM in Microsoft | Permalink | TrackBack (15) | Top of page | Blog Home
March 20, 2006
The Evolution and Regulation of the Payments System (Australia)
RBA: Speech-The Evolution and Regulation of the Payments System
Philip Lowe
Assistant Governor (Financial System)
Address to Payments System Conference 2006
Melbourne Business School
Melbourne - 14 March 2006
Click for print-friendly version
I would like to begin by thanking the Melbourne Business School for organising this conference. For far too long, discussions about payment systems typically took place behind closed doors and were largely the preserve of specialists in financial institutions. As this conference shows us, this is no longer the case, with payment systems posing challenging issues not just for the specialists, but also for academics and those involved in public policy. This more open discussion is surely in the interests of the community at large.
Today, I would like to address the issue of how the payments system evolves over time. As we all know, the system in 2006 looks quite different from that in 1996 and, no doubt, will look quite different again in 2016. But how well do we understand these changes and the forces driving them? And what role is there for regulation in shaping how things evolve?
The Big and Small Pictures
I think the big picture is clear to everybody – that is, the shift from cash and cheque payments to electronic payments (Graph 1). While we do not have data on the number, or value, of cash transactions, we do know that the average number of cheques written per person in Australia has halved since the mid 1990s. Conversely, the average number of credit and debit card payments per person has more than doubled, as has the number of direct debits and credits.
Graph 1
Graph 1: Payments per Capita
Similar trends are also evident in other countries, although Australia stands out in a number of dimensions. First, Australia is in a relatively small group of countries in which cheques are still used frequently, although amongst these countries, the decline in cheque writing in Australia has been relatively large. The second is that many Australians make less use of direct debits, and to some extent, debit cards than do people in many other countries. And the third is that use of credit cards in Australia has grown quite quickly, to the point where credit card usage is now quite high compared to that in most other countries.
Cheques | Direct Debit |
Debit Card | Credit Card | |||||
1997 | 2004 |
1997 | 2004 | 1997 | 2004 | 1997 | 2004 |
|
| Australia | 53 | 27 | 6 |
19 | 24 | 53 | 17 |
56 |
| Canada | 58 | 43 |
11 | 18 | 35 | 88 | 32 |
55 |
| France | 82 | 66 |
24 | 41 | n/a | n/a | n/a |
n/a |
| Germany | 9 | 1 |
66 | 75 | 3 | 23 | 4 |
4 |
| The Netherlands | 4 | 0 |
41 | 65 | 31 | 77 | n/a |
n/a |
| United Kingdom | 52 | 35 |
27 | 43 | 26 | 62 | 18 |
29 |
| United States | 239* | 119 |
5 | 20 | 15 | n/a | 56 |
66 |
| * 1995 data Source: RBA, APCA, BIS | ||||||||
Source: RBA, APCA, BIS
While the trends clearly differ across countries, the shift towards electronic payments is undeniably global. It is driven by advances in technology and the lower cost of electronic payments, as well as the additional convenience that they can offer to consumers and businesses. It is fair to say that few people are in any doubt this shift will continue for many years to come.
However, while the big picture is pretty clear, there is much less certainty about how various individual methods of electronic payment are likely to evolve – which methods will be the winners and which will be the losers. In preparing for this conference, I was reminded of the difficulty of making predictions by a 1979 report prepared by payment system experts under the auspices of the Australian Bankers' Association. This report concluded that ‘… Bankcard has a great start and it is difficult to see how a competitive credit card system could now displace it as the major card system in Australia (p 44)'. As you will no doubt be aware, last month Bankcard announced it was shutting down. The same report, in assessing the potential for an EFTPOS-like system, concluded ‘The size of Australia and the relatively small population would make a nation-wide point of sale system difficult to establish and cost justify (p 40)'. Today, the EFTPOS system is a key part of the payments landscape.
These, of course, are not the only examples of where things have turned out quite differently from what was expected. For much of the past decade or so – including at the time of the Wallis Inquiry – there have been numerous claims that smart cards or electronic purses were about to replace cash for many payments. Yet, while there have been some advances, relatively little has happened. On the other hand, use of the internet for banking has grown by much more than many thought likely in the mid 1990s.
Today, we hear a lot about mobile payments, contactless cards, the use of biometrics, and new ways to make person-to-person payments.1 No doubt some of these ideas will succeed, while others will fall by the wayside. It is simply very difficult for those in the industry, let alone regulators, to predict which products will ultimately find appeal with users and providers of payment services.
In contrast to the difficulty we have in making predictions about particular products, we do have a reasonable handle on the factors that are likely to shape the evolution of the overall system. Developments in technology are clearly important, as is the willingness of consumers to adopt new technologies. Experience has also taught us that relative prices and costs are critical, as are the arrangements under which new firms enter the market. In addition, experience suggests that the way collective decisions are made is also important.
Others at this conference are clearly better placed than I am to talk about the possibilities new technologies offer, so I would like to confine myself to the other issues I mentioned: relative prices and costs, access arrangements, and the importance of collective decision making. As you are no doubt aware, these all are issues the Reserve Bank has taken a close interest in.
Relative Prices
The first issue is relative prices and costs, since this issue has played a major role in the reform process so far. At the risk of stating the obvious, I will begin with the observations that, in many situations, consumers have a variety of payment methods from which to choose, and that price is one of the factors that undoubtedly influences that choice. The introduction of charges for writing cheques, for example, played an important role in the decline in the use of cheques in the late 1990s. Similarly, the rapid growth in credit card spending over this same period partly reflects the introduction of reward points, which lowered the effective price to consumers of transactions on a credit card. There are many other examples as well, although finding robust econometric estimates of the relevant elasticities has proven difficult due to lack of data and the fact that payment patterns often change only slowly over time.
Given the Reserve Bank's legislative responsibility to promote the efficiency of the overall payments system, an obvious question is whether the structure of relative prices is promoting the efficient evolution of the system. When we looked at this issue a number of years ago, we came to the view that they were not, with the most notable distortion being the very low (often negative) price that many cardholders faced for making a credit card transaction.
Of particular concern was that for many consumers, EFTPOS transactions were more expensive than were credit card transactions, despite the EFTPOS system having lower resource costs. When we looked at how this apparently paradoxical pricing had emerged, it was clear that the structure of interchange fees and restrictions imposed on merchants by the credit card schemes played a major role. After it became apparent that there was little prospect of these issues being addressed voluntarily, the Bank introduced a standard, establishing a cap on the interchange fees in the Bankcard, MasterCard and Visa systems, with the result that interchange fees have fallen from around 0.95 per cent of the transaction value, to around 0.55 per cent. The Bank also required the removal of the no-surcharge rule, allowing merchants to pass on the cost of accepting credit cards to those using credit cards. It has also been considering for some time the introduction of standards capping interchange fees in the EFTPOS and scheme-based debit card systems.
Overall, the reform process to date has promoted more soundly based competition in the Australian payments system. The subsidies paid to many credit card users have been reduced, as reward points have been cut and some surcharging has occurred. The decline in interchange fees has also reduced merchants' costs, and we have no doubt that this is flowing through into lower prices of goods and services than would otherwise have been the case. Lower interchange fees have also seen a re-orientation of competition in the credit card market. With less interchange revenue available, issuers are now competing for cardholders by lowering interest rates, rather than through reward points.
Not surprisingly, not everybody is happy with these changes, with at least three arguments having been made against the Bank's focus on relative prices and costs. These arguments can be briefly summarised as follows:
1. that interchange fees are subject to the same competitive pressures as other prices in the economy, and thus cannot be distorting relative prices of various payment methods;
2. that economic theory provides no basis for the Bank's regulatory intervention; and
3. that the Bank itself has created distortions in relative prices by giving American Express (and Diners Club) an advantage over Visa and MasterCard.
I would like to briefly address each of these.
Interchange Fees and Competition
The first of these arguments – that interchange fees are like any other price and subject to the normal forces of competition – is the easiest to respond to. In the case of each of the four-party credit card schemes, interchange fees have historically been set collectively by the members of the scheme. And, if anything, competition between these schemes creates upward – not downward – pressure on these fees. A scheme with a higher interchange fee paid to issuers is able to pay larger subsidies to cardholders, which in turn encourages use of that scheme. At least up to some limit, merchants appear unable to resist the high merchant service fees that result, being caught in a form of prisoners' dilemma. The clearest example of this perverse form of competition is the tit-for-tat increases in MasterCard's and Visa's interchange fees in the United States over the past decade.2 There, interchange fees have increased much more quickly than the general level of prices, despite significant reductions in telecommunications and other processing costs.
Even when interchange fees are bilaterally negotiated, as they are in the Australian EFTPOS system, the competitive dynamics are such that, once established, the fees are very difficult to change. Not surprisingly then, the bilateral interchange fees in the EFTPOS system have been fixed for many years, despite significant changes in costs and demand conditions.
All of this experience means that, whatever one thinks about the merits of interchange fees, it seems very difficult to argue that they are subject to the same competitive dynamics as other prices in the economy.
Theory
The second argument – that the Bank's focus on relative costs and prices is not supported by economic theory – raises more complex issues. Those who make this argument note that the theory of payment systems is still being developed and provides little guidance as to what constitutes an efficient configuration of interchange fees when there are multiple payment systems. By implication, this view holds that the Bank can have little confidence its interventions are welfare enhancing.3
Now it is undoubtedly true that the theory of two-sided markets and interchange fees is still evolving and realistic models are still being developed.4 Moreover, most of the theory that has emerged so far relates to a single payment system; only in the past couple of years have academics started tackling the question of how interchange fees should be configured when there are competing payment methods, each with different resource costs and benefits. At the risk of oversimplifying things, as the literature currently stands it suggests that, amongst a myriad of possibilities, it may be optimal for one payment system to be priced more attractively to cardholders than another, despite that payment system having higher total resource costs. There are a number of reasons for this, but they basically relate to the argument that there are network effects, some of which generate externalities, and that these network effects and externalities differ across payment systems. Measuring these various externalities is extremely difficult and, to my knowledge, no one has yet come up with empirical estimates that one can have confidence in and that can be used for policy work.
The issue is then largely one of judgment. In particular, to the extent that any externalities exist, are they such that in an efficient payments system, credit cards should be offered to cardholders at a significantly lower per-transaction price than EFTPOS, despite credit card payments having a higher total resource cost? No doubt, one could write down a notional set of demand and supply conditions in which such a deviation from normal price-cost relationships was optimal. However, our judgment has been that the externalities are unlikely to be so large or so different across payment systems as to justify such divergent pricing.
This judgment seems to have been borne out by subsequent developments. In particular, when interchange fees were cut, some said that the credit card market in Australia would go into a ‘death spiral'. In less emotive language, the argument was that the network effects were such that a reduction in the subsidy to cardholders would undermine credit card usage, leading to reduced merchant acceptance, which, in turn, would further reduce usage and thus merchant acceptance etc, etc, etc.
This clearly has not happened. While growth in credit card spending has slowed (Graph 2), presumably at least in part due to the altered price signals, merchant acceptance of credit cards has shown no signs of falling off and the credit card market remains vibrant. One plausible interpretation of this experience is that the previous level of interchange fees was considerably higher than could be justified in terms of the positive network effects they generated. While clearly the additional subsidy to cardholders that was made possible by the interchange fee did increase credit card use, it appears this additional usage was not necessary to induce widespread merchant acceptance, and was simply distorting cardholder decisions.
Graph 2
Graph 2: Value of Transactions
While I am on this general issue of theory, I would like to repeat a point I have made elsewhere: and that is, the Bank's use of cost-based standards does not reflect a view that, conceptually, interchange fees should necessarily be set with an eye to costs on just one side of the market. We adopted a cost-based approach for two very practical reasons. The first is that it is a transparent way of moving to a lower level of interchange fees, and was one that had been used by some card schemes to set these fees in at least some countries. The second is that under our legislation we cannot just set a particular interchange fee, but rather are required to impose a ‘standard', and a cost-based approach meets the legal test of a standard. The real issue though is not what costs should or should not be included in any particular standard, but rather, what is the appropriate configuration of interchange fees across the various payment systems.
American Express and Diners Club
The third argument about relative prices is a much more practical one: that is, the Bank's regulations have given an advantage to American Express and Diners Club. In particular, it is argued that, as a result of the Bank's reforms, American Express is able to offer its cardholders more reward points than issuers of MasterCard and Visa cards, and that this has encouraged the growth of American Express at the expense of the other schemes.
Before I respond to this argument, it is worth setting out the basic facts as to what has happened to market shares and merchant service fees.
Since the reforms came into effect there has been a small increase in the combined market share of American Express and Diners Club, including the transactions on bank-issued cards (Graph 3). In terms of the value of transactions, their combined market share has increased from around 14½ per cent in 2003, to around 16½ per cent today; most of this increase took place around the time that two banks began issuing American Express cards. A similar pattern is evident in the share of the number of transactions. It is worth noting that the issuing of American Express cards by banks is not a uniquely Australian phenomenon, but is one that is seen globally; American Express now has similar arrangements with nearly 100 banks around the world.
In terms of merchant service fees, the average fee charged by American Express has been under downward pressure since the reforms, although it has not fallen by as much as that in the MasterCard and Visa schemes (Graph 4). In the December quarter 2005, the average fee was 2.3 per cent. This is around ¼ of a percentage point lower than in November 2003, although the effective decline over this period is larger than this, given that in some cases American Express has given increased marketing payments to some merchants. In comparison, the average merchant service fee on MasterCard and Visa transactions has fallen by around 0.45 of a percentage point over the same period.
Graph 3
Graph 3: Market Shares of Card Schemes
Graph 4
Graph 4: Average Merchant Service Fee
In understanding why the regulatory response to MasterCard and Visa has differed from that to American Express and Diners Club, it is important to recognise the different structures and economics of the various schemes. In the MasterCard and Visa systems, different banks are typically on the acquiring and issuing sides of each transaction, with an interchange payment being made between the banks. In contrast, in the American Express and Diners Club systems there is simply no interchange fee paid on the vast bulk of transactions: American Express and Diners Club both act as the acquirer and the issuer. The exception to this, of course, is the bank-issued American Express cards, where American Express makes interchange-like payments to its partner banks.5
These arrangements with banks raise the obvious question of ‘shouldn't the payments to the issuing banks be regulated in the same fashion as the interchange fees in the other schemes?' As you know, we decided last year that the answer was no. This was for two interrelated reasons.
First, we judged that regulating payments to the partner banks would have little effect on American Express's merchant service fees. While these arrangements look similar to the traditional four-party schemes, one important difference remains – that is, American Express is still the sole acquirer of its own transactions. This lack of competition for acquiring American Express transactions means that if regulation required American Express to make smaller payments to its partner banks, there would be very little direct pressure on it to lower its merchant fees. This stands in stark contrast to what happened when interchange fees were cut in the other schemes. There, strong competition on the acquiring side of the market meant that the lower interchange fees flowed through very quickly into lower merchant fees. The same simply would not have happened in the American Express scheme.
The second reason is that it is unlikely that the banks' incentive to issue American Express cards would have been affected by the Reserve Bank requiring American Express to lower its interchange payments to its partner banks. Given the nature of the contracts between American Express and the issuing banks, lower interchange payments could have been offset with other forms of marketing and product support payments. In principle, this issue could have been addressed by regulating the totality of payments to the issuing banks, including marketing payments. In turn, no doubt there would have been calls by some for similar regulation of MasterCard and Visa. Our view, and I think one that is widely shared, is that such extensive regulation is not in the public interest.
So rather than regulating the payments for the sake of regulating, we have tried to tailor the response to the economics of the particular schemes. Ultimately, the capacity of American Express (or its partner banks) to offer relatively generous rewards stems, not from interchange fees, but from its ability to charge merchants a relatively high fee for transactions on its cards. Given this, the Bank has been keen to see that bargaining between merchants and these schemes is not distorted by restrictions imposed on merchants. It therefore sought and obtained American Express's agreement to remove its no-surcharge and anti-steering rules and to have its combined market share with Diners Club published.
As a result of the changes, merchants now have more options and better information. To the extent that they are prepared to use these options, the average merchant service fee in the American Express scheme will continue to fall. It should also continue to come under pressure as merchants question whether they get value for money for the increased margin they now pay on American Express transactions. Ultimately, it is this process of downward pressure on merchant fees – not the regulation of payments to partner banks – that will determine the reward points that American Express cards can offer, whether issued by American Express itself or by its partner banks.
Given the different structures of the schemes, any argument that American Express should be regulated in the same way as MasterCard and Visa is tantamount to the argument that interchange fees should not be regulated. The only way in which uniform regulation could have been applied would have been for the Bank to do no more than require the removal of the no-surcharge rule. While such an approach had the appeal of regulatory neutrality, we judged that, by itself, it would be unlikely to establish more appropriate price signals to cardholders within a reasonable time, particularly given the considerable customer resistance to being charged for credit cards. The approach that has been adopted is delivering significant net benefits – benefits that would have been foregone had the regulatory response been limited to just the removal of the no-surcharge rule.
None of this means that we are not monitoring the competitive landscape very closely. We expect that competition will lead to a further decline in American Express's average merchant service fee, and in time, this will be reflected in the structure of the products that are offered. If this were not to happen, and the beneficial effects of the reforms were to be eroded materially, we would need to look again at whether other options were in the public interest.
Entry
So much for relative prices. I would now like to turn to the issue of access arrangements.
In many parts of the financial system it has been the new entrants that have been the major catalyst for change and increased competition – home loans and on-line deposit accounts are perhaps the best examples. The new entrants typically have either new technology, and/or lower costs, and have not needed to worry about cannibalising the profits from existing customers.
Given the important role new entrants can play, the Bank has been concerned for some time that access arrangements to parts of the payments system were unduly restrictive. Our approach has been to try to work with industry to develop alternative arrangements that are fair both to the existing firms and new entrants. In the case of the credit card system, a regulatory solution was eventually required. In contrast, in the EFTPOS system, an industry solution has been found, although the Bank is proposing to place a cap on the price that an existing player can charge to provide a direct connection. The Bank has also indicated that it would also like to see access to the ATM system addressed.
The Bank's various discussions about access have highlighted the complications that can arise in payment systems built around physical bilateral linkages and bilateral business arrangements. In the case of Australia , this includes the EFTPOS, ATM and direct credit/debit systems. Two issues in particular have been raised.
The first is the potential for existing players to block the entry of a new participant. If a potential entrant is not able to establish direct physical connections or business relationships with existing direct participants, it might find itself at a material competitive disadvantage, making viable entry difficult. One solution is for transparent and objective criteria to be established as to who has the right to join these systems – in effect removing the right of veto of existing participants. This is the approach that has been taken in some overseas systems built around bilateral contracts, and it is one that APCA has recently been considering for the direct entry system in Australia.
The second concern relates to the additional costs that can arise when new participants wish to establish bilateral connections. The Bank's intervention in the EFTPOS system has been criticised by some on the grounds that, by making it easier for new entrants, there will be a proliferation of bilateral linkages, at considerable cost to the incumbents. This is a difficult issue. One response might be to restrict the number of participants with direct linkages, and thus potentially reduce total costs – although perhaps at the risk of less competition. Another would be to establish alternative access arrangements under which there would be a single point of physical access, rather than requiring new participants to establish multiple physical connections (this of course, could be consistent with bilateral business contracts or something more centralised). Not surprisingly, this is the general approach taken in a number of overseas payment systems in which there are many players. It is also one that APCA has been considering for the EFTPOS and ATM systems as it looks at possibilities for updating the communications packages and hardware platforms upon which these systems operate.
To date, the Bank's intervention on access has taken the current physical and business structure as a given. However, we would encourage the industry to give serious thought to whether, over time, we could move to an alternative and perhaps more efficient set of arrangements.
Collective Decisions
This brings me to my third point – that is, the role that the arrangements for making collective decisions can play in the evolution of the system.
At the heart of all electronic payment systems is a secure messaging system. A collective agreement as to the nature and specifications of these messaging systems is often required. Further, as technology evolves, updating the existing messaging systems through collective decisions about rules and standards, and investment in infrastructure, is sometimes necessary. I hasten to add though that, in many parts of the payments system, collective decision-making is not required, and would be an anathema to efficiency. In most parts of the payments system, competition serves us well.
Where decisions do need to be made collectively, co-ordination problems can arise. Institutions have different investment cycles, different strategic interests, and can have concerns that the collective investment in infrastructure may yield little competitive advantage, since all competing institutions will be adopting the same new infrastructure.
Last year the Reserve Bank raised the question of whether co-ordination was more difficult in Australia by virtue of the bilateral nature of a number of our payment systems and their governance arrangements.6 Since then we have had further discussions with many users and providers of payment systems and, not surprisingly, a wide range of views has been expressed. While these discussions are ongoing, I would like to share a couple of observations so far.
The first is that while most people think Australia's payments system serves its various users reasonably well, there is a sense that we are starting to fall behind international best practice in some areas. Two examples – both relating to the structure and capability of the messaging system – have been referred to a number of times. The first is the limited nature of the messaging format in the direct entry system. This format was designed primarily for high-volume recurring payments like salaries, and has been unchanged since the 1970s. A number of businesses have noted that it is inadequate for many modern business-to-business transactions, which require a considerable amount of information to accompany the payment. The second is the limited options for making online payments. Currently, if you want to buy goods and services over the internet you have little option other than to use your credit card or signature debit card. Many businesses, and I dare say consumers, would like to be able to have an online EFTPOS-like payment option as well. In a number of other countries this option is now available.
The second general observation from our discussions is that, while we may be starting to slip behind in some areas, there is actually quite a lot of innovation going on – there are plenty of people with ideas and new products being developed. However, some of this innovation reflects a desire to find ways around the limitations of the current messaging structures. For example, given the difficulties of sending remittance data with payment instructions, a number of products have been developed to send such data separately, but in a way that can ultimately be reconciled with the payment.
In summary, these discussions confirm that there is merit in examining further whether co-ordination issues are impeding the efficiency of the Australian payments system. I might note that over recent months it has been argued by some that by simply raising this issue, the Bank has already had a dampening effect on investment by creating uncertainty over whether the infrastructure might be appropriated by a central payment system or become stranded if duplicate infrastructure was established centrally. I must say that I find this response more than a little surprising. Let me make it clear that the Reserve Bank has no intention of appropriating investment, or requiring duplicated technology. Further, we are not saying that the particular solutions being adopted overseas should necessarily be adopted here, or that more centralisation is required. What we have done is to point to some of the implications of the current system and suggested that there is merit in taking another look at whether there might be a better way of doing things in the future. I am encouraged to see that there have at least been some tentative steps in this direction recently.
Conclusion
Let me conclude by trying to draw the various threads together.
The trend towards electronic means of payment is likely to continue, although it is difficult to predict exactly what forms of electronic payment we might be using in a decade's time.
Exactly how the system evolves will depend, amongst other things, on the price signals that various users of the system face, on the extent to which potential entrants can participate in the market, and on decisions about the basic messaging architecture.
The structure of payment systems means that there are reasons that, compared to other markets, one might have less confidence that the system, left to itself, will evolve in a way that promotes economic efficiency. Relative prices can be distorted by interchange fees, barriers to entry can limit competition, and co-ordination problems can arise. None of these factors, of course, mean that regulation is necessarily required. Indeed, as was envisaged by the Government when it established the Payments System Board, the Reserve Bank has a strong preference for industry solutions.
The Bank's interventions to date have been about creating an environment in which competition in the Australian payments system works in a way that promotes the evolution of the system in an efficient manner. The reforms have meant that price signals are less distorted than they were previously, access has been liberalised, and restrictions on merchants have been removed. While more may still need to be done, these reforms mean that we can be more confident than previously that whatever outcomes the market delivers, they will be in the collective interests of all users of the payments system.
Thank you.
References
Australian Bankers' Association (1979), ‘Future Payment Systems', A Study of Payment Systems in Australia and Possible Direction of Development in the Next Decade.
EFMA/Edgar, Dunn & Company (2005), ‘Technology-driven Growth Opportunities in the Payments Industry: An International Survey of Retail Banks', EFMA/Edgar, Dunn & Co. Report, September.
Evans, D.S. and R. Schmalensee (2005), ‘The Economics of Interchange Fees and their Regulation: An Overview', in ‘Interchange Fees in Credit & Debit Card Industries: What Role for Public Authorities?', Federal Reserve Bank of Kansas City, Kansas City, pp 73–120.
Guthrie, G. and J. Wright (2006), ‘Competing Payment Schemes', Victoria University of Wellington and National University of Singapore.
Lowe, P.W. (2005), ‘Innovation and Governance of Payment Systems', Address to Banktech.05 Conference, Sydney, Reserve Bank of Australia Bulletin, October, pp 46–51.
Macfarlane, I.J. (2005), ‘Gresham's Law of Payments' , Address to AIBF Industry Forum, Sydney, Reserve Bank of Australia Bulletin, April, pp 8–13.
Rochet, J-C. and J. Tirole (2005), ‘Two-Sided Markets: A Progress Report', University of Toulouse.
Footnotes
1. For a recent survey see EFMA/Edgar, Dunn & Company (2005). (back to text)
2. See Macfarlane (2005) for details. (back to text)
3. See, for example, Evans and Schmalensee (2005). (back to text)
4. For recent reviews see Evans and Schmalensee (2005), Guthrie and Wright (2006), and Rochet and Tirole (2005). (back to text)
5. Diners Club also has a marketing arrangement with one bank, although under that arrangement Diners Club remains the card issuer. (back to text)
6. See Lowe (2005). (back to text)
March 20, 2006 at 10:08 AM in Payments | Permalink | TrackBack (6) | Top of page | Blog Home
March 19, 2006
Firm: Apple to ship $4.2B in wireless iPods by 2010
AppleInsider | Firm: Apple to ship $4.2B in wireless iPods by 2010
By Katie Marsal
Published: 12:00 PM EST
New research carried out by the independent research provider, Generator, illustrates that Apple's iPod business could soon give second-tier mobile phone makers a run for their money.
"A lot of people don't realise that Apple's iPod business is already bigger than Sony Ericsson. What's more, Apple is the market leader in a growth market while Sony Ericsson is a second-tier player in a mature industry," said Andrew Sheehy, Research Director at the firm.
According to Sheehy, Apple's scale now means that the company can go out and negotiate deals with suppliers of miniature cameras, video recorders and wireless modems -- items normally used in mobile phones -- that are competitive with what many mobile handset makers can secure.
"Things change when you're buying in that sort of volume. A lot of people who supply components for use in mobile handsets are licking their chops right now: there's lots of new business up for grabs and we know that people are talking to Apple right now about doing this," said Sheehy.
Although Wi-Fi modems could be used instead, the report explains that the best way to implement a wireless iPod would be via wholesale data agreements with one mobile operator in each iTunes market.
Apart from being able to take pictures and shoot movies with their wireless iPods, users could wirelessly publish their self-generated digital content on iTunes, the firm speculates.
"The mobile content side is interesting but you could also offer knock-out voice service with this approach -- Apple could offer free WiPod to WiPod calls, using a Skype-like software application. A lot of people in the mobile industry will be worried when this starts happening," Sheehy added.
Last month, iPod chipmaker PortalPlayer said it had teamed with wireless solutions provider CRS to deliver Wi-Fi and Bluetooth connectivity on its next-generation system-on-chip scheduled to make its debut in the second half of the year.
The San Jose, Calif.-based PortalPlayer, whose system-on-chip audio controllers have been a fixture in the iPod since its inception, currently supplies Apple with chips for all varieties of the digital music player with the exception of the low-end iPod shuffle.
This news has brought on industry speculation that Apple could launch its first wireless iPods in late 2006 or early 2007.
March 19, 2006 at 10:42 PM in Wireless | Permalink | TrackBack (43) | Top of page | Blog Home
Airline Tickets, Booking Class & Abbreviation
Airline Ticket Abbreviation - Booking Classes - Airline Code
Booking Class
The following codes are used on airline tickets to identify the class of service
and the associated fare structure:
First Class Examples: A, F
Business Class Examples: C, D, J
Economy Class Examples: H, K, L, M, O, N, S, V, Q & others
Detailed Booking Class
* A - First Class Discounted
* B - Coach Economy Discounted
* C - Business Class
* D - Business Class Discounted
* F - First Class
* H - Coach Economy Discounted
* J - Business Class Premium
* K - Thrift
* L - Thrift Discounted
* M - Coach Economy Discounted
* P - First Class Premium
* Q - Coach Economy
* R - Supersonic
* S - Standard Class
* T - Coach Economy Discounted
* V - Thrift Discounted
* W - Coach Economy Premium
* Y - Coach Economy
Double Digit Airline Abbreviation
These codes, which appear in front of the flight number on the ticket, identify the airline:
* AA - American Airlines
* AC - Air Canada
* AF - Air France
* AI - Air India
* AB - Alaska Air
* AZ - Alltalle
* A3 - Amtrak
* BA - British Airways
* CO - Continental Airlines
* CP - Canadian Pacific Airlines
* DL - Delta Air Lines
* ET - Ethopian Airlines
* HP - American West
* JL - Japan Air Lines
* KL - KLM-Royal Dutch Airlines
* LH - Lutheran German Airlines
* LY - El Al Israel Airlines
* ME - Middle East Airlines
* MG - MGM Grand
* NW - Northwest Airlines
* OA - Olympic Airways
* PK - Pakistan International
* PR - Philippine Airlines
* QF - Quantas
* SA - South African Airways
* SK - Scandinavian Airlines
* SN - Sabena
* SR - Swissair
* TB - Trump Shuttle
* TW - Trans World Airlines
* UA - United Air Lines
* US - US Air
* WN - Southwest Airlines
* YX - Midwest Express
* ZV - Air Midwest
Ticketing Abbreviation
Ticketing Abbreviation Meaning/Explanation
Non-refun or Non-refundable No refund value
Non-rerte or Non-reroutable No changing of destinations
Non-endor or Non-endorsable No changing of airlines/carriers
Stopover Break journey in that country
Transit Stopover and change plane
Inbound Return Sector
Outbound Outgoing Sector
Ex-SIN Departure from Singapore
No Show Passenger no show on departure date
Pax Passenger
Child Fare Age range from 2 to 11 years old
SATA ticket Students (ISIC) under 35 years old and Youth (IYTC) under 26 years old
ISIC Card International identity Student Card
FOP Form of Payment
TCP Traveling together
N/A Non admissible
TTL Ticketing deadline
GV 2 Minimum of 2 passengers to travel together. Must depart and return together
GV 4 Minimum of 4 passengers to travel together. Must depart and return together
GV 10 Minimum of 10 passengers to travel together. Must depart and return together
W2A With 2 adults
PTA or Prepaid ticket Advice Prepaid ticket advice. Ticket collect from country of departure, payment
PNR Booking reference number
STNP, s/o Stopover
ow One way
Dep Departure
YRT 1 year ticket
Add-ons Extra flights at extra costs
Amendment Changes to your booking
Backtracking you cannot go back from whence you came
Cancellation Penalties involved if you cancel your ticket
Carrier Refers to the name of the airline you are travelling on
Changes Penalties involved if you change your ticket
Child Person 2-11 years
Class Letter used to book your flight reservation
Codeshare A flight operated by another airline
Combination Permitted add on fares allowed to be used with the fare you are on
Conditions Rules pertaining to this airfare
Destination The final stopping place before turning around to come home
ETA Estimated time of arrival
ETD Estimated time of departure
E-tickets Electronic ticket, full payments must be made before E-tickets can be issued
Farebasis The name/code of the faretype you are travelling on
Fares The cost of the airfare
Infant Child up to 23 months at time of the flight departure
Interline Transfer Transfer from one airline to a different airline
Longhaul An overseas flight of some distance i.e Sydney London
Mileage The amount of miles permitted to be flown on an airfare
Minimum stay/Maximum stay The shortest and longest times you can stay at your destination
MPM Maximum permitted mileage-the maximum distance you can fly in air miles
Nominated Carrier The airline you can fly
Open Jaw Fly into one city and out of another city at no penalty
Open-Dated No return date set
Origin Point you start from
Outbound Flight from USA or point of origin
OW One way journey
PNR Passenger name reference - used for computer reservations
Reissue Changes requiring a new ticket to be issued
Rerouting Changes to flight routing
RT Fares Return journey fares
Season Different times of the year for travel have different fares
Stopover When you leave the airport for more than 24 hours
STPC Airline pays for your accommodation at a stopover
Surcharges Extra costs involved
Surface Sector You make your own way between two points
Turnaround point The furthest point on your return journey
US Pass Airpass within the USA
V.V. Vice versa
Validity How long a ticket is valid e.g. the minimum and maximum times you can be away
Waitlist The flight is full you are waiting for a cancellation to be confirmed
March 19, 2006 at 10:35 PM in @ My Views @ | Permalink | TrackBack (53) | Top of page | Blog Home
March 16, 2006
The New Road Ahead: Where next for the knowledge economy?
The New Road Ahead: Where next for the knowledge economy?
Reprinted from Newsweek, Special Edition on Technology
by Bill Gates
December 2005
It's hard to say exactly when it happened, but at some point in the last 20 years the word "knowledge" became an adjective. As intellectual property became increasingly important to businesses, and personal computers started appearing on every desktop, employees morphed into knowledge workers, companies began to focus on knowledge management and key information was stored in knowledge bases connected -- in theory -- via knowledge networks. The result was the knowledge economy, a phenomenon that has transformed the business of business and helped entire emerging economies to compete globally.
But this is only the beginning. Most of the "knowledge" on which the knowledge economy is built is actually just information—data, facts and basic business intelligence. Knowledge itself is more profound. As management guru Tom Davenport once put it, "Knowledge is information combined with experience, context, interpretation, and reflection." It's the knowledge derived from information that gives you a competitive edge.
Most of us now live in an "information democracy"-- if you have access to a PC and the Internet, you can tap into almost all the information that is publicly available worldwide. Advanced software and Web services can help trace, slice and dice the information in ways that were impossible only a decade ago. But while we've gone a long way toward optimizing how we use information, we haven't yet done the same for knowledge.
This is a vast growth opportunity, and a surprisingly tough challenge. While information wants to be free, knowledge is much "stickier" -- harder to communicate, more subjective, less easy to define. For instance, the knowledge you accumulate throughout your career -- the "tacit" knowledge, rather than the "explicit" knowledge found in, say, manuals or textbooks -- defines your value to the organization you work for. Your ability to combine it with the knowledge of co-workers, partners and customers can make the difference between success and failure -- For you and your employer. Yet today, even locating sources of knowledge within complex organizations can be daunting.
But as software gets smarter about how people think and work, it's starting to help them synthesize and manage knowledge, too. Some of this technology is deceptively simple. Software such as our own Microsoft Office OneNote helps people take and organize their typed and sketched notes using a "pen and paper" approach that is more abstract than text-based word processors. On another level, OneNote and a new generation of "mind-mapping" software can also be used as a digital "blank slate" to help connect and synthesize ideas and data -- and ultimately create new knowledge.
Researchers at Microsoft and elsewhere are developing technology that can unobtrusively "watch" you working, then make suggestions about related subjects or ideas. Interestingly, even if the software makes a bad guess, it can still be valuable in helping spark new ideas. Computer scientists are also making progress against a long-held dream of "intelligent agents" that anticipate your needs and provide just-in-time information that's relevant to the work you're doing. Experimental programs known as reasoning engines can test your ideas against commonsense logic, spotting flaws in hypotheses and acting as "virtual subject experts" to help guide your thinking.
These technologies promote "consilience" -- literally, the "jumping together" of knowledge from different disciplines. They help people combine their own ideas with at least some existing knowledge far more efficiently than was previously possible. But they also leave a key problem unsolved: how to unearth all the new ideas that are being generated around the world.
Today's search engines are good at locating tidbits of information in an ocean of data, and even at finding answers to simple questions. The next step is pattern-recognition engines and mental models to help people mine and assess the value of all that information, and technologies that infuse online data with meaning and context. None of this is science fiction: the technologies that make it possible already exist.
The power they hold is hard to exaggerate. Inventor Robert Metcalfe theorized that the value of a network is roughly equal to the square of the number of people using it. "Metcalfe's Law" applies equally to knowledge: being able to tap into the world's finest thinkers as easily as we can now search the Web for information will revolutionize business, science and education. It will literally transform how we think -- and help us finally realize the potential of a truly global knowledge economy.
March 16, 2006 at 10:04 AM in Microsoft | Permalink | TrackBack (7) | Top of page | Blog Home
Remarks by Bill Gates, Chairman and Chief Software Architect, Microsoft Corporation
Bill Gates' Web Site - Speech Transcript, Microsoft Government Leaders Forum Americas
"Enabling Innovation and Prosperity in a Connected World"
Microsoft Government Leaders Forum Americas
Washington, D.C.
March 15, 2006
EUGENIO BEAUFRAND: Welcome back. It's great to have Bill Gates with us today. So, we're just backstage remembering how the Government Leaders Forum got started, I guess, eight years ago now in a modest event in Seattle, and how much he really enjoys coming here every year and sharing with you his vision of the impact of technology in government, and more importantly to hear from you on the challenges and issues that you're facing in your country.
So, please join me in welcoming the Microsoft Chairman and Chief Software Architect Bill Gates. (Applause.)
BILL GATES: Well, good afternoon. I'm excited to be here and get a chance to talk about some of the big changes in technology that create an opportunity to make more efficient government systems, and really redefine the way that citizens think about how they work with government and how efficient communication takes place.
Obviously, we benefit immensely from the exponential improvement that's taking place in the underlying technologies. Chip technology is subject to the exponential improvement referred to as Moore's Law, and that has not only stayed true for the last 20 years, giving us a million times the amount of computing power at a much lower price, but certainly will hold true into the future as well. And so when we think about what we can do with computing, we no longer need to think of performance as that limiting factor.
Likewise, some of the related technologies, the ability to store information, the size of the disk, is actually improving even faster than chip capabilities. So, in the past, it would have been impractical to think about storing all of the videos of your training sessions and your meetings, and making those easily accessible and navigable to all your employees, or even where appropriate to citizens. Today, the cost to do that is extremely low, and is almost commonsense to let people refresh their skills, or stay in touch even if they work at a distance. So, the cost of disk technology is an incredible enabler.
Likewise, the performance of cyber networks has gone up again at exponential rates, and so where it's possible to have that kind of connection, the ability not just to send data, but to send high definition video, even targeting individual viewers now becomes practical, and so what we used to think of as TV is completely revolutionized. The idea of channels goes away, the idea of targeting, the advertising, targeting the material based on your preferences, so that pieces of news that you see depend on your interests becomes just commonsense.
Software Breakthroughs
Software breakthroughs play a big role here as well. Historically, a phone was something you used to make phone calls. Today, the idea that your mail and calendar are there, that it just connects up to exchange, it's secure, it's synchronized, that's kind of commonsense for all the new phone platforms. In the future, you'll be able to speak to your phone and have that recognition, let you navigate the information, or send off short messages. You'll be able to use the camera on the phone not just for pictures, but if you see a sign you want translated into your language, or you have an expense receipt that you want to take a photo of and have the numbers there recognized and filed away on an automatic basis, if you have a person you're meeting, they give you their business card, you can take that photo and off it goes and gets stored in your Contacts. In fact, if you take a picture of them, that's stored there as well. So, it becomes a very intelligent device. The ability to show maps, show things that are nearby, to be the digital wallet, all of that will be common place for that device in the pocket.
And yet, 10 years ago, even the idea that your music collection would move away from physical CDs was not something that people took for granted. Now that's happening, and happening in a very rapid and exciting way. So, software can continue to improve, and that's why Microsoft has dramatically increased its R&D budget, more than doubling it in the last five years. It's over $6 billion a year. A lot of that work is invisible. The work we do for security, that's about 30 percent of it, and making that more something where you don't have to get involved, it's built into the system, that's very critical to us. Making these management tools, so that instead of visiting individual systems, you just set a policy and you can know that it's applied very broadly to those systems. Being able to see the behavior on a system, and see if it's unusually slow, and before that person has to pick up a phone and call, sending an alert, gathering information, so some very automatic diagnosis can be done, even comparing it to whatever database Microsoft has from the experience of all Windows users, and being able to make that far less of a manual process to figure out what's wrong and actually use the network connection to send the updates so that you're never having to actually go visit the machine itself. Things like that can reduce complexity and free up IT investment to go into the new areas, the wireless networks, the portable machines, collaborative Web sites that define the future opportunities.
When I was thinking about the different government systems, I thought, what are some of the key trends that really pull these things together, and how can I describe the neat new things I'm seeing in a way where it can help you imagine the places where you're not yet using a digital approach that you might be able to put that in place? So, I picked what I think of as the three big trends with some examples of that. Hopefully it will stimulate ideas about where, given the basic infrastructure, the Internet, the PC, how you can get far more out of that really by just a trivial investment, have the working style be far more effective.
First Trend: Collaboration
The first trend is collaboration. Historically, people collaborated by meeting face to face, or e-mail has become a key part of that. Now, both of those are great techniques, will continue to be very important. Voice mail was important, but it was isolated from electronic mail. So, one of the most basic things we're doing is using the Exchange system now to bring your voice mail and your e-mail in together, letting you dial in to the system, and not only hear voice mail, but have text-to-speech that lets you go through your e-mail, or navigate your calendar as well. And so, no more dividing line between those different worlds.
But even more important is letting people connect and share both in real-time, or when they're not working at the same time, connecting asynchronously. In real-time, we call that Live Meeting, where in addition to connecting up your phone, you can connect your screen up, and so talking through problem, going through a discussion session, editing a document, you can do that even if you're in a different location. And it's simply using the Internet to make that connection, and to have that sharing capability. And that's, of course, some work, one to one, one to a hundred, one to 10 thousand, and it's really reshaped for Microsoft how we keep up to date. And we've reduced our internal travel, travel by employees, by over 30 percent since we've been able to put that into place.
In terms of sharing things in a collaborative way, what you really want to do is be able to create Web sites without any programming, and that's what we've been working towards with SharePoint, particularly the new version coming out next year, the idea that you can simply say, okay, I want to have a discussion group about this topic. I want to have blogging, or editing things that on the public Internet is called the Wikipedia, and I want it to be secure, administrable by my key people, backed up the right way, we've taken those concepts and just built them in as a template to that SharePoint infrastructure that is standard in Windows Server. So, collaboration, I think the way to frame this mentally, is to say, what groups of my employees do I wish could share best practices, hand off work to each other, look at the status of things, have group discussions, which of them could benefit from that, and just connecting them up to a SharePoint server where IT doesn't need to get involved when they create these new sites, that's the foundation that lets you do that.
A good example in the United States is the Illinois Department of Central Management Services, they put all their procurement people there, and so now the procedures, the handoff, the major procurements, there are Web sites for those things. If somebody goes on vacation, you get a handoff, you can see if something is coming up on a deadline. A very simple system, had a very dramatic benefit in making those people more effective and, of course, that means saving the State millions of dollars, and also having a learning culture where people are seeing how things are done, and working in a new way.
Another example down in Chile is called "ChileCompra." Again, this relates to procurement, and here it's an electronic platform that includes the structured part of listing things, making that public, making it obvious to people that there was openness in terms of how the bidding takes place there. And it fits into that overall agenda that Chile is having around their digital agenda, where authenticating people who connect up is very straightforward. I hear the benefits are pretty dramatic. The estimates are that they're saving $60 million by more competitive bids, and actually allowing small businesses that wouldn't have been able to participate, because they don't have the sales force, now, because it's a discoverable electronic process, to come in and see where they can be involved.
A final example is one that is pretty dramatic, where, in Louisiana after Katrina, the ability to exchange information really needed to cut across departmental boundaries. A big problem with IT systems is that often these collaborative sites can bridge if you can just set them up and let people connect up, let them have search commands to find these things, you can get people sharing information about emergent issues. Obviously with Katrina that needed to involve the Red Cross, it needed to involve a number of state agencies, federal agencies, and have people come up and register where they work, they can find family members, other people would be able to go in and look at that. And even connecting it up to the satellite imagery system that we have, so you can look at different locations, see the status of things, the schedule for when things are going to change. Over 300,000 citizens connected up and communicated through that system, and yet it needed to be set up within a few days, and it needed to deal with the fact that many of these sites had had their Internet connectivity brought down in a way that meant that their connections were interrupted and that they needed to be able to work with an offline access. So they actually used the Groove capability that lets you work that way.
Second Trend: Mobility
A second trend that's complementary, but kind of amazing as well, people are now thinking about getting access to information wherever they go, so this is mobility. Of course, we've had portable computers for a long time. They're getting smaller, faster. That improvement by the hardware vendors to make them thinner, less expensive and lighter, actually we had a big milestone just last week when a number of our partners brought out what we call Ultra-Mobile PC. This is an example of one, this one actually happens to come from Samsung. You can see it's a very high resolution display. This is a device whose price ranges from $600 to $1,000 in its basic configuration.
The information is just automatically brought on here by the mail system and the file replication system, so you don't have to work to bring it on. We've made it so that actually not only can you use the pen, so it's got a pen built in, so you can work with ink and things, but also for a lot of things, if you're just browsing information, we've made it so that just touch works very well. We actually had to invent an idea of how you use your thumb to make these things very simple. So that's been a nice advance. Also for a lot of users who are used to a thumb-type keyboard entry, we actually took this idea. So if you press this, you can see we bring up – you may not be able to see it. We bring up a little soft keyboard, so a lot of users can do entry that way as well.
So ink, speech, touch, all of these things, giving people a way of interacting. So you'll have a full spectrum of devices, from the phone in your pocket, to the larger screen phone, to the low-end Tablet device, all the way up to a large Tablet, then of course on your desktop moving up to a screen that used to be 15 inches, now would be 20 inches, or even 24 inches, so you can work with more information, but all of those a common architecture so that the applications, what you learn, the way you work is all identical and connected through these amazing wireless networks.
A good example where mobility is in place is the U.S. Army Advanced Technology Center for their medical application, called Battlefield Medical Information Systems, actually took a combination of Pocket PCs, which are the smallest devices, connected up to those for diagnosis and information capture, as well as being able to connect up these kinds of devices. So they wrote one application, but it could target interaction with the patient record and what was going on, and immediately get the input to that person. Both of those let you use ink input so your notes can be captured very quickly, and yet go back up there and be part of that permanent record.
Third Trend: Digitization
The final trend is digitization, where the move [is] away from paper forms, the move away from paper records, and files, and warehouses, to doing those things on a digital basis, but not just on an image-capture basis, on a structured basis, so that mining the data, finding the slice of data that's important, that all becomes commonsense. We see this from consumer, where the photos you take of your kids as they grow up, looking at those by location, by time, eventually even with the software recognizing who is in the photo, so it can help select those out, or making it easy for you to take things, so that you can navigate by those different sets, and being able to share those photos very easily, that is just expected, and a big change away from the shoe box, and yet with the right type of backup approach even more secure than it would have been on a physical basis.
Government records, same thing, the need to have explicit policies about what you keep, about what you don't keep, the digital realm lets you be more explicit about those things, to understand who should access which piece, and not only have that, but also have an audit trail, so somebody is doing unusual access that will jump out in terms of a profile of usage there that you'll be able to navigate with very visual tools. A great example of this is actually my own state, the state of Washington, where they were building up a lot of physical records and made the jump now to do that on a digital basis with a rich content management system, and that lets them have the access, save money, and I think is a very forward looking example.
A final example is one that I think really brings all these trends together, digitization, in this case it's educational, so the curriculum, mobility, empowering the students with a Tablet-type device, and then collaboration, creating a community around students, parents, teachers, and so that when there's a schedule change, or a problem taking place, or a parent wants to know what the assignment is, or the attendance record, all of that information access is there in a very simple way.
The place this got pulled together in a very leadership example is what's called Philadelphia School of the Future. They build Web sites that are designed for the parents to come in and teachers being able to take the subset of information that should be visible to the parents, authenticating the parents, having that back and forth work in a very easy way. Even bringing in the normal processes, the human-resources applications that the teachers have to interact with, the student records applications, all of those are set up there. Then they build portals, whenever there's an issue that the school wants input on, the idea that you can have that discussion group, or blog type approach, they just – that's a component set in the right place in the Web site. They put that in, and then without doing any development, that's very straightforward.
They've been using the Tablet PC, they will be trying out the Ultra-Mobile PC that gets you to a lower price point even than before. They've actually issued the students smart cards, so the idea of how they authenticate and control the information, they're a pioneer there, because the whole world over time will move away from passwords to using this type of smart card.
I think the most advanced idea is how this affects the curriculum. There's a lot that has to be done to think through a digital curriculum, and how it lets the teacher customize, lets them bring in video, lets the students kind of explore and find things that they are interested in, and bring back to the classroom. And one of the software tools they've built is what they call the Virtual Teaching Assistant, and they're willing to share that with people. So as we get projects like this, the ability to not only share best practices, but literally take some of the code, some of the content, and make sure they get reused, built upon, and even go back to help each other, I think is one of the really exciting things as we're taking digital technology and finding the new applications.
Conclusion
In the world of government, there's great work going on, I'd say, in many, many areas around the world, judicial systems without any paper in some locations, educational systems that are really moving into the non-textbook world. Medical systems, there I don't think anybody has achieved the ideal yet, but that's a critical issue that the opportunity there to understand that becomes better, to make less mistakes, to reduce the costs, and waiting, and raise the resource utilization, certainly a great investment that's taking place in that.
So I'm excited that we got the group together to share ideas over these last few days. It's part of a process where we want to be a real enabler, and getting you to think even more aggressively about how technology can help. We're certainly committed not just in our research budget, but in our dialogue with you to understand how we can set our product priorities in a way that can have a huge impact. I think there's a big opportunity for us working together.
Thank you.
March 16, 2006 at 09:53 AM in Microsoft | Permalink | TrackBack (1) | Top of page | Blog Home
Gates Sketches Out Vision for the Future
Gates Sketches Out Vision for the Future - Yahoo! News
By MATTHEW DALY, Associated Press Writer Wed Mar 15, 8:23 PM ET
McLEAN, Va. - Microsoft Chairman
Bill Gates sketched out a vision for the future Wednesday in which a cell phone will become a "digital wallet," able to receive e-mail and even scan business cards, while computers and TVs will merge.
ADVERTISEMENT
Microsoft Corp., the world's largest software maker, also wants to "redefine the way that citizens think about how they work with government and how efficient communication takes place," Gates told about 300 political, business and academic leaders from Canada, Latin America and the United States at the company's Government Leaders Forum.
The two-day event is intended to explore ways to improve government use of computers, as well as the transition to what Gates called the "knowledge economy."
Gates also showed off the company's newest gadget, a computer that's about the size of a large paperback book but runs a full version of the
Windows XP operating system. Redmond, Wash.-based Microsoft unveiled the new ultra-mobile personal computer at a technology trade show in Germany last week.
The wireless-enabled PC is everything a full computer or laptop is — minus the keyboard, Gates said. The Samsung prototype weighs about 2 1/2 pounds and sports a 7-inch touch-sensitive screen that responds to a stylus o