Technology: India’s Infosys offers £407m for British IT firm

India’s second largest IT services business, Infosys Technologies, yesterday swooped on UK-based Axon Group with an all-cash offer of £407m as it attempts to strengthen its position in European markets. The deal will see the three men who founded Axon in 1994 walk away with nearly £70m.

Infosys employs more than 90,000 people, with the majority in India. IT consultancy Axon has 2,000 employees and works with firms that use business software from German developer SAP.

Infosys chief executive Kris Gopalakrishnan, one of the original team of seven who founded the company in 1981 with only $250 (£140), moved to assuage fears that the deal would lead to job losses and mass-outsourcing of Axon’s work to the subcontinent. He said there is little overlap between the clients of the two companies.

“It is very important to us that people stay and make the whole thing work,” he stressed. “We are doing this acquisition so we can leverage all the employees.”

The deal, which values Axon at 600p and is being funded from Infosys’s cash pile, has the backing of Axon’s management and its founders who hold just under 17.9% of the business.

The deal will crystallise the fortune of Mark Hunter, the Belfast-born IT expert who stepped down as chairman at the end of last year. He was part of the three-man team who founded Axon back in 1994, and brought it to the stock market five years later. He has been selling down his stake over the past few years and now holds just under 11.5% which is worth £44m.

Co-founder Donald Kirkwood will receive more than £14.4m for his remaining shares while the last of the original team, Paul Manweiler, will get about £10.4m.

Axon has expanded into the US over recent years, buying rival Feanix in 2005 and clinching three further deals the following year. It also has operations in Asia including a base in China.

In April at the company’s annual meeting chief executive Steve Cardell, who Infosys hopes will remain with the business, said “despite the uncertain macroeconomic environment, trading has been encouraging”.

Axon is due to report its half-year results this morning with analysts expecting revenues of about £120m and operating profits of about £20m.

Jack Schofield: The rise of The Huffington Post

When I heard that Arianna Huffington was setting up The Huffington Post in 2005, I thought it was a joke. It sounded like the personal indulgence of a millionaire socialite who “didn’t get the web” or she’d have started 10 years earlier.

But it didn’t take long to find out how wrong I was. HuffPo, as it’s known, rapidly became a major force. The Observer called it the world’s most influential blog, and it helped inspire the Guardian’s own Comment is Free.

Huffington was born in Athens in 1950 as Arianna Stassinopoulos and made her initial impact in the UK. At university she was president of the Cambridge Union, before becoming a TV and radio personality and moving in with the late Bernard Levin, the sharpest newspaper columnist of the age.

She then left for the US, where she married Houston oil millionaire Michael Huffington. And when he ran for Congress as a Republican, Arianna got into American politics. It was an interest she retained after they divorced in 1998 – following 11 years of marriage – along with a chunk of his money and his surname.

Although The Huffington Post wasn’t a personal ego trip, plenty of
egos were involved. Arianna got everyone’s attention by enrolling lots of celebrities – initially, perhaps, her friends and contacts – to blog opinions and serious political commentaries.

Nor was HuffPo on the conservative right, like her former husband. Arianna had moved to the left and was closer to the Democrats. As it tuned out, an independent liberal voice was just what America wanted.

Today, HuffPo has so much content that it has turned into a newspaper, and that is how it styles itself: it uses a three-column newspaper-style grid with lots of small index pictures. It also has various newspapery departments including politics, business, entertainment and living.

And it has Green, an ecological section that takes in the environment, climate change, “crazy weather” and so on.

The main sections are supplemented by the Huffpost’s Big News Pages, which bring together all the stories about a particular topic. Examples include Russia Georgia War, Iran, Barack Obama, Oprah, Apple, Britney Spears, Sex, and Green Living. If you don’t see what you want, there’s a Huffington index that is somewhat like The New York Times.

Unlike most newspapers, readers can leave comments on any story, and they do. One piece on the current front page has accumulated almost 6,000 of them. HuffPo may have started hiring reporters and video makers, but the blog-based community is still an important part of the mix.

This month, more surprisingly, HuffPo has added Chicago, which marks its first attempt at providing a local newspaper within an internet newspaper. It has local information, local bloggers, and is edited by someone who used to work for the local paper. Huffington says: “We plan to roll out local versions of HuffPost in dozens of cities.”

Tomorrow, the world? Arianna has already conquered England, America and a large slice of the web, so why not …

Telecoms: Ericsson tosses its chips into European joint venture

Ericsson is putting its wireless microchip business into a joint venture with its Franco-Italian rival STMicroelectronics as the companies look to expand their customer base in the face of slowing mobile phone sales.

The new business, which will be jointly run by the two firms, will be number three in the mobile chip industry behind the US leaders Qualcomm and Texas Instruments. Based in Geneva, the as yet unnamed venture will employ nearly 8,000 people in a unit that last year would have generated $3.6bn (£1.9bn) in revenues.

The deal was warmly welcomed by Nokia, one of the venture’s key customers, as “a positive move” that would create a “strong industry player”. Analysts, however, pointed out that the Finnish firm, which makes four out of every 10 handsets sold worldwide, is no fan of Qualcomm, having been embroiled in bitter legal disputes with the US firm, and a stronger European rival would suit the company.

Ericsson is putting its mobile platforms business, which specialises in modems and designing multimedia phones, and $1.1bn in cash into the venture. STMicroelectronics, created just last month through the merger of STMicro’s mobile phone chip business with NXP Semiconductors of the Netherlands, will put in its wireless chip-design business, worth an estimated $1.2bn.

The venture will supply chips for handsets ranging from bottom-of-the-range pre-pay phones to the next generation of internet-enabled multimedia devices. As well as Nokia, the new venture will count SonyEricsson, Samsung, LG and Sharp as its major customers. The only one of the top five handset makers the venture does not supply is the US-based Motorola.

Ericsson’s chief executive, Carl-Henric Svanberg, will be chairman of the board of the business and STMicroelectronics’ chief executive, Carlo Bozotti, will be vice-chairman.

The deal comes as sales of mobile phones begin to show some signs of slowing down and there is consolidation in other parts of the industry. Last month, for instance, Nokia took control of the British mobile phone software company Symbian. Nokia helped create the business, with the UK-based Psion, 10 years ago.

Yesterday’s deal will allow Ericsson to focus on its telecoms networks business, which has suffered as the credit crunch bites and operators rein in spending.

Analysts warned that the venture could be bad news for the UK-based Arm Holdings, which designs processor chips for mobiles. Nick James at Panmure Gordon said the deal – along with STMicro’s acquisition of NXP – represents “a pretty intense wave of consolidation”.

Though the deal does not directly challenge Arm’s position as the dominant processor architecture for mobile phones, he said, “it does reduce the number of potential licensees and may put further pressure on Arm’s licensing revenue.”

Jack Schofield: Don’t have your head in the clouds about online services

So-called “cloud computing” has taken a beating over the past few weeks. The concept is simple enough, and hundreds of millions of people have been doing it for many years via Microsoft Hotmail. It just means accessing an online application – in this case, email – via a web browser, instead of running a separate program on your personal computer.

Of course, the number of online applications has grown tremendously. It now stretches from simple to-do lists via office-style programs such as spreadsheets and project management to more specialised business services such as accounting and customer relationship management. Users can also store their photos and movies online.

This certainly has advantages. People can access their online applications from any computer at any time, and collaborative work becomes easier. Often, too, these online applications are “free” (paid for by advertising).

But cloud computing also has drawbacks, which the pundits may be much less keen to tell you about. One has been highlighted recently: reliability. Google Docs, Gmail, Twitter and Amazon’s S3 service have all been out of action, and some of Apple’s MobileMe users have had a torrid time. At Webware, Rafe Needleman has posted a list of the 10 Worst Web glitches of 2008 so far.

Alas, even if the online application works, users may not be able to get to it. They may have local problems with their browser or their internet connection. Their internet service provider may have network problems. Remember, the internet is never guaranteed to work: it just operates on the principle of “best efforts”. (We tried. We failed. Hard luck.)

Even if an online application works and you can get to it, things can still go wrong. The company that provides the application can change it in any way (turning the interface you loved into one you hate, for example), without asking, or they can simply close it. Nikon is about to close its Fotoshare photo service, and AOL may well close its Xdrive online storage. If you were a paying Streamload user, all your data has already been dumped. Hard luck.

Still, at least when services close, users are usually given a few weeks to rescue their stuff. It’s much worse when people are locked out because the supplier thinks they have done something wrong, or because their account has been hacked.

Nick Saber, for example, recently found himself locked out of Gmail. That was bad. What was worse was that he was automatically locked out of every other Google service that uses the same logon. If it happens to you, you won’t be able to use Gmail, Google Talk, Google Docs or your calendar; you won’t have access to your photos at Picasa, and so on. It’s devastating.

Yes, people can also lose access to their data when they fail to back up their PCs. We’ve been telling them that for decades. But online data also needs to be backed up, and supporters of cloud computing should be telling people that as well.

How far cloud computing can go is another matter. Applications run much slower online than they do on a local PC, and a browser provides a much more limited interface than a desktop application, so there are sacrifices as well as advantages. Still, it’s not either/or: I think there’s plenty of room for both.

But anybody who thinks the cloud is going to replace personal computers completely is welcome to put their PC in the bin. Indeed, if you have a very recent high-end PC or Mac, I might take it off your hands for free.

Ask Jack: August 21 2008

Student laptop

My son is about to go to university to study architecture. What sort of laptop would you recommend, for up to £600?
Cathy Matheson

JS: The final choice depends on the use, and there are at least three possibilities, so you will need to talk to your son and perhaps to his university. The first idea would be to get a lightweight portable to carry everywhere for note-taking, email and web browsing. A good cheap example would be the Acer Aspire One running Windows XP on a 10-inch screen. The keyboard beats the Asus Eee PC version. A spare battery would be useful.

The second option would be a desktop replacement laptop that he could use in his room. This would provide computer functions plus home entertainment, doubling as a DVD player, sound system, and games machine. There are plenty of portables with 15.4in widescreens from Dell, HP/Compaq, Toshiba and other suppliers, but aim for a Core 2 Duo processor and 2GB or more memory for Windows Vista. Look for a Kensington lock to tie it down.

The third option would be a portable workstation, intended to run specific software that is used on the course. Unfortunately, the software used for serious architectural work – such as Autodesk’s AutoCAD and Bentley MicroStation – needs lots of memory and a separate graphics card, rather than the Intel integrated graphics chips built into cheap laptops. To handle complex models with AutoCAD 2008, I’d be looking for something like a Dell Latitude D830 with 4GB of memory, 64bit Windows Vista Ultimate, nVidia Quadro or similar graphics, and probably a screen upgrade: Autodesk recommends 1,280 x 1,024 pixels. You might not get much change out of £1,000, and it’s not worth cutting corners: having 2GB instead of 4GB saves £40, and having 32bit XP Pro or Vista Business only saves £34. Before spending this sort of money, your son should talk to his university department and preferably to more advanced students to find out exactly what is required. A simpler and cheaper laptop may well do.

If a course involves the use of specialist software such as AutoCAD, the university will usually provide access to shared computers that have it installed. Students who want to run it themselves can usually obtain an educational version at a reduced price. The cheap LT version of AutoCAD 2008 costs around £1,500, whereas the student version costs about £100 for a 14-month licence.

Books for Kindles

I am considering an Amazon Kindle. However, I’d like to use it for ebooks freely available in text format, and others in Microsoft’s Reader format.
John Borgoy

JS: The Kindle can handle books in plain text (.txt) plus the Amazon (.azw) and Mobipocket (.mobi; .prc) formats. It can also handle Microsoft Word documents and web pages, but you have to email these to your kindle.com address. Amazon will convert them and send them wirelessly to your Kindle for a small fee. You can convert Microsoft Reader (.lit) files by using a free converter such as ABC Amber LIT.

Movie rescue

My DigiFusion Freeview recorder died when its power unit fried after a power cut. Is there any way I can transfer the movies and recorded programmes to my PC from the hard drive?
John Rogers

JS: If you remove the hard drive from the recorder, you should be able to mount it in an external drive enclosure and connect it to your PC via a USB port. I’d guess it’s a 3.5in drive. If you are lucky, it will be in the FAT32 file format used in Microsoft MS DOS and recognised by most operating systems. If you have a proper desktop PC, a cheaper alternative is to fit the drive internally, but this can be a little trickier.

Searching for data

My computer died suddenly and I had to get another. I can read the hard disk of the old machine via USB, but how do I get at emails and the address book?
Alec Williams

JS: You should be able to copy the old data from your backup CDs or external hard drive! Since the hard drive still works, however, you can copy the data to your new PC in the usual way and then import it. You can find the data by running a disk-wide search for the types of storage file your software uses. If you used the Windows address book, search for *.wab (with an asterisk) files. If your email program was Outlook Express, search for the Inbox.dbx and Folders.dbx files and copy that whole folder across. For help, click here and here to read the Microsoft Knowledge Base articles.

Backchat

As mentioned in Technophile (August 7), I struggled with the Linpus version of Linux on an Acer Aspire One subnotebook. Alan Cocks comments: “Information forums are appearing. This one might have helped some of your frustrations”.

On copying cassette tapes etc using Audacity software, Tim Gossling points out that it does have track splitting: go to Analyze and select Silence finder to automate the process “with probably varying degrees of success, particularly for classical music,” he says. “Manual splitting is done via Project and Add label at selection: click in the label field and type in a title. File|Export multiple will then generate multiple files, each named with the track label.”

· Get your queries answered by Jack Schofield, our computer editor at jack.schofield@guardian.co.uk

Mobile phones: Vodafone puts up prices

Vodafone has become the latest mobile phone company in the UK to raise the cost of making a call to try and claw back some of the money lost through increased regulation, with prices for its pay-as-you-go customers due to rise by a third next month.

The move will heap further pain on consumers who already face a winter of financial strain as a result of increased household bills. Food prices have risen over 13%, according to the government’s own figures; British Gas has hiked gas prices by 35% and now the water companies have admitted that the average bill will increase faster than inflation – which is already running at a 16-year-high of 4.4% and expected to hit 5% in the autumn.

Vodafone, the UK’s second largest mobile phone company, has just under 11 million pay-as-you-go – or pre-pay – customers, who will see the cost of calling increase from 15p a minute to 20p from the start of September.

The company is also upping the cost of calling for any of its 7.5 million contract customers who exceed their monthly call allowances, from 12p a minute to 15p a minute.

It is also increasing the cost of calling 0871 numbers to 35p from 25p a minute and the cost of calling 0870 numbers – which many call centres use and are often chargeable from mobile phones – from 15p to 20p a minute.

Vodafone’s price rises come after rivals O2 and T-Mobile hiked their prices back in July. T-Mobile raised its prepaid minimum call charge from 10p to between 15p and 25p, depending on which tariff the customer is on.

Market leader O2, meanwhile, increased its minimum call charge for pay-as-you-go customers, who have not upgraded to a new tariff, from 10p to 20p. It has 11.5 million pre-pay customers.

Its new prices apply to all calls to standard UK landlines and UK mobiles, as well as international numbers and those starting with prefixes such as 0845.

Orange, meanwhile, has kept its prices for callers on its Racoon and older pre-pay tariffs at 15p a minute, while the price of calling on its newer pre-pay tariffs – such as Camel – are 20p a minute.

Contract customers who make calls outside their allowance to a landline or other Orange customer are charged 12p a minute, while for calls to other networks cost 35p a minute.

Vodafone said it has not increased its charges for about two years and said that only part of the reason for the price rises was “regulation”, but industry observers believe the operators are looking to hike charges to reclaim some of the money being lost as regulators look to cap prices.

The cost of making a call while overseas has already been hammered by EU telecoms commissioner Viviane Reding, but roaming calls make up just a fraction of the operator’s revenues. Far more important are so-called mobile termination rates – the charges mobile networks levy on each other and fixed-line operators to call mobiles – which account for about 20% of revenues and have become the focus of intense regulatory scrutiny in recent months.

Last year regulator Ofcom introduced a new set of price caps that slashed prices by between 10% and 45% for the UK’s five networks – O2, Orange, T-Mobile, Vodafone and 3 – to between 5.1p and 5.9p a minute. But more recently Reding has suggested rates should come down by 70% to 2p or less.

Cafepress: Get your customised thongs here

Not many shops stock 150 million products. Cafepress not only manages this amazing feat, it adds around 45,000 new ones every day. This is only possible, of course, because the products don’t exist until someone orders them. Your T-shirt, poster, cap, bag, book, mug or whatever is produced and shipped on demand.

But that is only half the Cafepress story. The other half is that its business is based on that old Web 2.0 standby, “user-generated content”. Instead of buying a T-shirt printed with someone else’s design, you can create your own. And if it’s really good, you might even make a bit of money by letting Cafepress sell it to everybody else.

If you fancy trying your hand, you can set up a small business using Cafepress to collect the money, produce the goods, mail them out, and handle customer service. All you need is access to a computer and some graphics software that can save your design in, for preference, the PNG (portable network graphics) format. The site provides web space and has a Learning Center to help you get going.

Cafepress, founded in a garage in 1999, has now grown to the point where it has more than “6.5 million independent shopkeepers and members in addition to syndicated and corporate stores”, including geek favourites Dilbert and Wikipedia,

But I don’t expect most people are in it for the money. Cafepress products started to take off as promotional items, sold from websites such as MP3.com. Its speed of reaction also proved ideal for people who wanted to capitalise on events both on the web and in the real world. If you picked up an “internet meme” such as the Flying Spaghetti Monster, you could soon buy the T-shirt.

Presidential elections are a great time for sloganeering and cartooning, and therefore also for Cafepress. If you have a point to make, you can get it on your chest. Barack Obama must be worth a fortune.

Cafepress has steadily expanded its product lines. It now prints designs not just on T-shirts, shorts, tank tops and thongs but on stickers, badges and magnets, a variety of hats and bags, baby bibs and even housewares. That category takes in mugs, aprons, wall clocks, tiles, pillows and pet bowls. Cafepress also prints books and manufactures CDs.

One problem with the site is finding stuff, but you can search for keywords or browse by topics such as Animals & Wildlife, Military, Music & Instruments, and Religion. There’s also a Careers & Professions section that runs from accountants to writers, with a rich set of offerings for computer programmers.

Another problem is that Cafepress hasn’t expanded beyond the US. It mails products overseas, but this adds to the price. There are discounts for shipping two or more of the same item, but this increases the risk of customs clearance and import charges. This will no doubt get users searching for local sites that take a similar approach, such as spreadshirt.net and creativecraving.com in the UK.

Web networking: MySpace invader does business

A new British dotcom start-up will today take on the might of Silicon Valley in the booming market of social networks aimed at people in business with the launch of Talkbiznow.com.

Following the success of sites such as Facebook, MySpace and Bebo, social networking has moved into the business world. In June, California-based LinkedIn, which has more than 25 million users, joined the internet jet set when it secured a billion-dollar valuation in a funding round that included Sequoia Capital, the Silicon Valley investor that backed YouTube. The previous month saw Plaxo acquired by US cable company Comcast.

But Talkbiznow, which is aiming for 3 million users within six months, goes a step further by offering people the ability to set up online conferences; chat instantly with contacts while sharing a range of business documents; and search for more than just people’s names in the hunt for new connections.

“We are about much more than just keeping in touch, we are about making people more productive in their business network,” said chief executive and co-founder Martin Warner, a former investment banker with JP Morgan.

The concern for Talkbiznow – which employs only 11 staff in London, Nottingham and San Francisco – is whether it has come to the game too late. Warner, however, said the company had been able to learn from mistakes made by rival sites.

Talkbiznow, which has been in development for six months, has already raised two rounds of funding from European investors and is putting the finishing touches to a $25m (£13.4m) third round that is likely to see the company take on at least one major US venture capital firm.

Logica remains upbeat on IT outlook

Logica raised its revenue expectations yesterday after reporting better than expected half-year results. Chief executive Andy Green said the IT services firm had seen some slowdown in spending by financial services firms but income from other sectors was holding up well.

“There is uncertainty out there,” he said. “As we get into the fourth quarter of this year, many people will re-set their IT budgets for 2009, and we do not know what they will do. If they do decide to set them lower, then we will see some slowdown.”

Green also predicted that Europe, where the British firm earns 95% of its revenue, would hold up well despite yesterday’s gloomy data on the eurozone economies. “I still remain of the view that Europe as a whole will deliver low GDP growth – zero, 1% or 2%; that sort of level – and the IT services business will grow at a few percentage points above that. The big players like ourselves will do better than the smaller players.”

Green took over at Logica in January after the ousting of Martin Read. When Green announced a turnaround plan in April, he predicted revenue growth this year would be 3%, suggesting the market would slow as the year goes on.

Yesterday, however, he increased that forecast to 4%, suggesting a stronger second half than expected, and helping shares to gain more than 10%. Over the first six months of 2008, Logica’s revenue rose 6% to just under £1.77bn, well ahead of the City’s forecasts of £1.67bn. Half-year operating profits up 16% at £118m were also slightly better than many expected.

“Interim results are a shade ahead of our estimates,” said George O’Connor at Panmure Gordon, while the technology team at Piper Jaffray added: “This is a solid statement from Logica, showing that the operational performance has remained strong despite the major changes as part of the strategic plan.”

Logica saw a much better performance from the core UK unit, which accounts for a fifth of Logica’s revenue. Last year saw its profit margins plunge to 1.3% as a result of over-runs on big contracts. Over the first six months of this year the UK business reported margins of 6.3% as revenues grew 6% to £354m, and operating profits leapt to £22m from £4m last year.

Green’s plan to turn around the business includes cutting 1,300 jobs out of a workforce of 39,000, and beefing up its offshore facilities in countries such as Morocco and India to meet demand from customers seeking to reduce their costs.

Over the past six months Logica has increased this offshore workforce from 3,450 to 3,900, and expects to have 8,000 by the end of next year.

Green said that what its customers, who include many of the world’s largest corporations, require is changing.

Rather than starting big IT projects they want to use technology to reduce costs. “We were talking a lot [to customers] about new customer relationship management (CRM) systems and business intelligence systems, and now they are asking, ‘how are we going to do some of the work we do today in Morocco and India, to get costs under control?’.”

Telecoms: Jajah deal with Intel will boost PC telephoning

Californian internet telephony specialist Jajah has clinched an important deal with computer chip designer Intel which will put its cheap-rate telephone service in easy reach of consumers and potentially halt a decline in the take-up of so-called VoIP services.

Under a deal to be announced today, Jajah’s voice over the internet technology will be integrated into a new generation of Intel chips that include the company’s Remote Wake technology, meaning calls can be taken even when a computer is in standby mode.

Integrating the technology into the chip means computer manufacturers, and increasingly broadband providers who want to give PCs away to customers signing up to long-term contracts, can supply machines that can make cheap calls using the web straight out of the box.

Until now, VoIP services, such as Skype, have relied upon consumers downloading and correctly installing software. More than half of all computer users have never downloaded any software from the internet let alone experimented with VoIP.

Jajah has more than 10 million users across the world and is backed by the venture capitalists who put cash into Google and Apple.

The deal with Intel means manufacturers will be able to provide computers that have Jajah ready configured and use the machine’s own microphone, include a handset or even have a phone socket built-in which can be used with any existing phone. Jajah allows users to call any fixed or mobile phone anywhere in the world for a fraction of what they would normally pay.